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New York's authority on commercial real estate leasing, deals and culture.Tue, 31 Mar 2015 21:59:49 +0000hourly1http://wordpress.com/http://s2.wp.com/i/buttonw-com.png » Daniel Geigerhttp://commercialobserver.com
Paul Massey on Massey Knakal’s Growthhttp://commercialobserver.com/2012/11/paul-massey-on-massey-knakals-growth/#commentshttp://commercialobserver.com/2012/11/paul-massey-on-massey-knakals-growth/
Daniel Geigerhttp://commercialobserver.com/?p=242953Paul Massey began his career at CBRE in 1984 but disembarked on his own within months after becoming disenchanted with the company’s hierarchical atmosphere. Senior brokers there, he found, were unwilling to collaborate with or groom younger talent.

It was the start of what seemed like the career of someone bent on doing things his own way.

Four years later, Mr. Massey would launch the scrappy, eponymously named startup he founded with colleague RobertKnakal, overseeing just a handful of staff. The two developed a system of brokerage that no other firm had then employed, in which employees were assigned to specific territories in the city.

Many observers of the firm thought the plan would be a death knell, limiting its ability to recruit talent. After all, what top broker would want to be assigned to some obscure neighborhood in Queens or Staten Island?

The pair eschewed the real estate establishment in more glaring ways, too.

Paul Massey.

Offended, for instance, by the way guests talked over the speakers at the Real Estate Board of New York’s annual banquet, a lack of etiquette most in the industry consider one of the dinner’s beloved traditions, the pair walked out and didn’t return for years.

The gala is considered the industry’s Oscar night and its signature networking event.
It’s now abundantly clear that Mr. Massey never got CBRE fully out of his head and that he never aimed to be a maverick so much as someone with the ambition to build a brokerage platform no less diversified or sophisticated on his own.

Over the past year or so, Messrs. Massey and Knakal’s firm, Massey Knakal, has been transformed from a company that focused solely on small to midrange sales deals to one that now convincingly offers a suite of services, including retail and mortgage brokerage arms.

In recent months, it began raising millions of dollars to start an investment fund that will provide equity and bridge financing for real estate acquisitions in the city.
While Mr. Knakal has continued to focus on brokerage and has become one of the city’s leading investment sales deal-makers, the company’s quiet diversification has been masterminded by Mr. Massey.

“We’re thrilled with how it’s coming together,” Mr. Massey told The Commercial Observer recently. “We realized there’s a lot of synergy between these different service lines.”

Smart, strategic ideas don’t go unnoticed in a city as competitive as New York, and Mr. Massey’s moves were quickly seen as savvy by rivals. Several of the firm’s peers have since likewise moved into other services in order to broaden their business.

The seeds of Massey Knakal’s recent growth can be traced to the recession, when it was dealt a number of humbling setbacks. When the sales market in the city tanked in 2009, the company was forced to close its Brooklyn office and scrap plans to move into New Jersey.

It seemed the company’s growth, which relied on moving into territories and stationing sales staff to focus on these new areas, had ground to a halt. Even the company’s image took a battering. Ken Krasnow, a top manager at the firm who oversaw sales staff, was found to have let his brokerage license lapse, drawing embarrassing ire from state regulators after a real estate trade publication published the results of its own investigation.

Mr. Massey had the composure to grasp the opportunity of the moment. Companies were shedding staff, and brokers at rival firms were unhappy amid the paltry business. It was during this period that Mr. Knakal hired Garrett Thelander, a former banker at Anglo Irish Bank who had left the embattled institution, to help start a mortgage brokerage arm.

Though the firm had grown to handle more transaction volume than any other commercial real estate brokerage company in Manhattan, with Mr. Thelander’s hiring, Mr. Massey saw the potential to tap into a market more vast than even the pool of 1 million commercial buildings in the city.

“The building sales business was a $35 billion annualized market at its peak,” Mr. Massey said. “The mortgage business is a $40 billion market. It’s a significant market, and many of the clients are the same as on the sales side. I asked myself, why aren’t we doing this?”

The underpinnings of the company’s growth, however, were laid by more fundamental decisions Mr. Massey made years ago. In the late 1990s, he began professionalizing the company’s management, installing chief financial officers, marketing staff and other executives.

“CBRE is the mothership for me,” Mr. Massey said. “They set the model for a professionally managed brokerage.”

With Mr. Massey mostly content to work behind the scenes, Mr. Knakal has always been the public face of Massey Knakal and the archetype of its success.

He built himself into a deal-making power broker not through the corporate heft of his company, but by self-sufficiently crafting his brand, relentlessly working the real estate speaking circuit, authoring myriad newspaper columns and networking.

And yet it’s hard to imagine that Mr. Knakal would have been quite as successful without the platform Mr. Massey has focused on building—a fact Mr. Knakal readily admits.

“I’m a big believer in the territory system we have here, and we’ve benefited from it like everyone else here has,” Mr. Knakal said.

“Paul and I have always just gravitated toward opposite sides of the business, and I think that’s why we’ve been successful working together.”

]]>Paul Massey began his career at CBRE in 1984 but disembarked on his own within months after becoming disenchanted with the company’s hierarchical atmosphere. Senior brokers there, he found, were unwilling to collaborate with or groom younger talent.

It was the start of what seemed like the career of someone bent on doing things his own way.

Four years later, Mr. Massey would launch the scrappy, eponymously named startup he founded with colleague RobertKnakal, overseeing just a handful of staff. The two developed a system of brokerage that no other firm had then employed, in which employees were assigned to specific territories in the city.

Many observers of the firm thought the plan would be a death knell, limiting its ability to recruit talent. After all, what top broker would want to be assigned to some obscure neighborhood in Queens or Staten Island?

The pair eschewed the real estate establishment in more glaring ways, too.

Paul Massey.

Offended, for instance, by the way guests talked over the speakers at the Real Estate Board of New York’s annual banquet, a lack of etiquette most in the industry consider one of the dinner’s beloved traditions, the pair walked out and didn’t return for years.

The gala is considered the industry’s Oscar night and its signature networking event.
It’s now abundantly clear that Mr. Massey never got CBRE fully out of his head and that he never aimed to be a maverick so much as someone with the ambition to build a brokerage platform no less diversified or sophisticated on his own.

Over the past year or so, Messrs. Massey and Knakal’s firm, Massey Knakal, has been transformed from a company that focused solely on small to midrange sales deals to one that now convincingly offers a suite of services, including retail and mortgage brokerage arms.

In recent months, it began raising millions of dollars to start an investment fund that will provide equity and bridge financing for real estate acquisitions in the city.
While Mr. Knakal has continued to focus on brokerage and has become one of the city’s leading investment sales deal-makers, the company’s quiet diversification has been masterminded by Mr. Massey.

“We’re thrilled with how it’s coming together,” Mr. Massey told The Commercial Observer recently. “We realized there’s a lot of synergy between these different service lines.”

Smart, strategic ideas don’t go unnoticed in a city as competitive as New York, and Mr. Massey’s moves were quickly seen as savvy by rivals. Several of the firm’s peers have since likewise moved into other services in order to broaden their business.

The seeds of Massey Knakal’s recent growth can be traced to the recession, when it was dealt a number of humbling setbacks. When the sales market in the city tanked in 2009, the company was forced to close its Brooklyn office and scrap plans to move into New Jersey.

It seemed the company’s growth, which relied on moving into territories and stationing sales staff to focus on these new areas, had ground to a halt. Even the company’s image took a battering. Ken Krasnow, a top manager at the firm who oversaw sales staff, was found to have let his brokerage license lapse, drawing embarrassing ire from state regulators after a real estate trade publication published the results of its own investigation.

Mr. Massey had the composure to grasp the opportunity of the moment. Companies were shedding staff, and brokers at rival firms were unhappy amid the paltry business. It was during this period that Mr. Knakal hired Garrett Thelander, a former banker at Anglo Irish Bank who had left the embattled institution, to help start a mortgage brokerage arm.

Though the firm had grown to handle more transaction volume than any other commercial real estate brokerage company in Manhattan, with Mr. Thelander’s hiring, Mr. Massey saw the potential to tap into a market more vast than even the pool of 1 million commercial buildings in the city.

“The building sales business was a $35 billion annualized market at its peak,” Mr. Massey said. “The mortgage business is a $40 billion market. It’s a significant market, and many of the clients are the same as on the sales side. I asked myself, why aren’t we doing this?”

The underpinnings of the company’s growth, however, were laid by more fundamental decisions Mr. Massey made years ago. In the late 1990s, he began professionalizing the company’s management, installing chief financial officers, marketing staff and other executives.

“CBRE is the mothership for me,” Mr. Massey said. “They set the model for a professionally managed brokerage.”

With Mr. Massey mostly content to work behind the scenes, Mr. Knakal has always been the public face of Massey Knakal and the archetype of its success.

He built himself into a deal-making power broker not through the corporate heft of his company, but by self-sufficiently crafting his brand, relentlessly working the real estate speaking circuit, authoring myriad newspaper columns and networking.

And yet it’s hard to imagine that Mr. Knakal would have been quite as successful without the platform Mr. Massey has focused on building—a fact Mr. Knakal readily admits.

“I’m a big believer in the territory system we have here, and we’ve benefited from it like everyone else here has,” Mr. Knakal said.

“Paul and I have always just gravitated toward opposite sides of the business, and I think that’s why we’ve been successful working together.”

]]>http://commercialobserver.com/2012/11/paul-massey-on-massey-knakals-growth/feed/0paul massey for webThe Incredible Shrinking Tenanthttp://commercialobserver.com/2012/11/the-incredible-shrinking-tenant/#commentshttp://commercialobserver.com/2012/11/the-incredible-shrinking-tenant/
Daniel Geigerhttp://commercialobserver.com/?p=242130Earlier this year, approximately 150,000 square feet opened at the Midtown office tower 399 Park Avenue when the law firm WilmerHale, a tenant in the building, left to relocate to Lower Manhattan.

The property, a 1.75-million-square-foot skyscraper owned by the large commercial owner Boston Properties, is home to the global headquarters of Citibank and is widely considered one of the finest office buildings along Park Avenue, an exclusive and highly desirable corridor in Midtown.

Boston Properties had found takers for the building even in the worst of times, filling the few hundred thousand square feet that suddenly became available in 2008 when Lehman Brothers, a former tenant, collapsed and sparked the financial crisis.

Fast-forward to 2012, a market several years removed from the depths of the recession, and this time around, Boston Properties wasn’t taking any chances. According to the leasing agent at the property, Peter Turchin, an executive at the real estate services firm CBRE, Boston Properties quickly switched to the leasing strategy du jour: finding takers for the space one floor at a time rather than waiting for one big user to fill a large portion or all of the space.

Mr. Turchin deftly signed a succession of deals in recent months, only a short time after the floors came available, with several tenants, including First Manhattan Company, the Jordan Companies and Epoch Investment Partners. Speaking at a recent market breakfast hosted by CBRE at its Midtown headquarters at 200 Park Avenue to discuss leasing statistics through the third quarter of the year, Mr. Turchin pointed out the window to 399 Park Avenue just down the block, identifying the group of floors in the tower where he had done the deals, visibly vacant as they waited for the tenants he signed to move in shortly.

“It was a purposeful strategy to take that big block and lease it floor by floor,” Mr. Turchin told The Commercial Observer. “Each floor is 25,000 square feet, and we filled seven floors in four months. It was a successful leasing campaign that netted higher activity and rents than if we had marketed the whole block.”

The approach was well-tailored to a Midtown market where the pace of big deals has fallen off but smaller tenants are still active.

According to CBRE data, not a single lease in excess of 250,000 square feet has closed so far this year, a sharp drop from last year, when five leases in this size range were signed during the same period (the largest deal of the year, a 1.6-million-square-foot lease taken by Viacom at 1515 Broadway, was not counted in the statistics because it was a renewal). Only two deals in excess of 100,000 square feet have been done in Midtown this year, compared with 10 during the first three quarters of 2012. Even midsize deals, those between 50,000 and 100,000 square feet, fell. Tenants of this size committed to approximately 1.1 million square feet of space this year, compared with 1.5 million square feet during the same period in 2011.

Meanwhile, smaller deals have tracked more consistently with last year’s numbers. About 2.2 million square feet of space was leased by tenants of 25,000 to 50,000 square feet so far in 2012, compared with 2.6 million square feet last year—a smaller gulf than with bigger deals.

Approximately 3 million square feet was leased both this year and last in Midtown by tenants 10,000 to 25,000 square feet in size, while 3.1 million square feet was taken by small tenants—under 10,000 square feet —so far this year, compared with just slightly less during the same period last year.

The data presents a picture of a market in which larger tenants have either been on the sidelines or far slower to take space. Smaller deals, however, are continuing at last year’s brisk pace.

“If you’re an owner or you’re a tenant in the small-tenant market, under 10,000 square feet, it’s been just as busy as it was in 2011,” Mr. Turchin said. “The real drop-off has been in the large-tenant market.”

A big part of the issue is that many of the major tenant groups in Midtown, primarily the financial sector, have not been growing.

Midtown South, meanwhile, which has captured the imagination of tech and creative firms, has seen brisk leasing because these sectors have been thriving and expanding.

“The tenants that are growing are the advertising and tech tenants right now, which are centered in Midtown South,” said Bill Elder, a top executive and leasing director at RXR Realty, a landlord that saw the potential of Midtown South and invested heavily there in past months, buying the Starrett-Lehigh Building and 620 Avenue of the Americas. “The large financial institutions are not growing right now; they’re stable at best. And that’s based largely in Midtown.”

Yet RXR Realty has hosted growth in its Midtown portfolio too, by catering to smaller users.

Artisan Partners, an investment management firm, moved into 1330 Avenue of the Americas, a building RXR owns in Midtown at the beginning of the year, committing to nearly 6,000 square feet. The company signed an almost 6,000-square-foot expansion in recent days.

Numerous theories have emerged as to why bigger tenants have been sluggish to take space, with the general sentiment being that more sizeable companies are more coupled to persistent economic headwinds, global problems such as the European debt crisis and the uncertainties created by the presidential election.

“Everyone is generally trying to be very intelligent with their space utilization, doing more with less,” said Neil Goldmacher, a top leasing executive at Newmark Grubb Knight Frank.

“The market is going to continue to see that compression.”

]]>Earlier this year, approximately 150,000 square feet opened at the Midtown office tower 399 Park Avenue when the law firm WilmerHale, a tenant in the building, left to relocate to Lower Manhattan.

The property, a 1.75-million-square-foot skyscraper owned by the large commercial owner Boston Properties, is home to the global headquarters of Citibank and is widely considered one of the finest office buildings along Park Avenue, an exclusive and highly desirable corridor in Midtown.

Boston Properties had found takers for the building even in the worst of times, filling the few hundred thousand square feet that suddenly became available in 2008 when Lehman Brothers, a former tenant, collapsed and sparked the financial crisis.

Fast-forward to 2012, a market several years removed from the depths of the recession, and this time around, Boston Properties wasn’t taking any chances. According to the leasing agent at the property, Peter Turchin, an executive at the real estate services firm CBRE, Boston Properties quickly switched to the leasing strategy du jour: finding takers for the space one floor at a time rather than waiting for one big user to fill a large portion or all of the space.

Mr. Turchin deftly signed a succession of deals in recent months, only a short time after the floors came available, with several tenants, including First Manhattan Company, the Jordan Companies and Epoch Investment Partners. Speaking at a recent market breakfast hosted by CBRE at its Midtown headquarters at 200 Park Avenue to discuss leasing statistics through the third quarter of the year, Mr. Turchin pointed out the window to 399 Park Avenue just down the block, identifying the group of floors in the tower where he had done the deals, visibly vacant as they waited for the tenants he signed to move in shortly.

“It was a purposeful strategy to take that big block and lease it floor by floor,” Mr. Turchin told The Commercial Observer. “Each floor is 25,000 square feet, and we filled seven floors in four months. It was a successful leasing campaign that netted higher activity and rents than if we had marketed the whole block.”

The approach was well-tailored to a Midtown market where the pace of big deals has fallen off but smaller tenants are still active.

According to CBRE data, not a single lease in excess of 250,000 square feet has closed so far this year, a sharp drop from last year, when five leases in this size range were signed during the same period (the largest deal of the year, a 1.6-million-square-foot lease taken by Viacom at 1515 Broadway, was not counted in the statistics because it was a renewal). Only two deals in excess of 100,000 square feet have been done in Midtown this year, compared with 10 during the first three quarters of 2012. Even midsize deals, those between 50,000 and 100,000 square feet, fell. Tenants of this size committed to approximately 1.1 million square feet of space this year, compared with 1.5 million square feet during the same period in 2011.

Meanwhile, smaller deals have tracked more consistently with last year’s numbers. About 2.2 million square feet of space was leased by tenants of 25,000 to 50,000 square feet so far in 2012, compared with 2.6 million square feet last year—a smaller gulf than with bigger deals.

Approximately 3 million square feet was leased both this year and last in Midtown by tenants 10,000 to 25,000 square feet in size, while 3.1 million square feet was taken by small tenants—under 10,000 square feet —so far this year, compared with just slightly less during the same period last year.

The data presents a picture of a market in which larger tenants have either been on the sidelines or far slower to take space. Smaller deals, however, are continuing at last year’s brisk pace.

“If you’re an owner or you’re a tenant in the small-tenant market, under 10,000 square feet, it’s been just as busy as it was in 2011,” Mr. Turchin said. “The real drop-off has been in the large-tenant market.”

A big part of the issue is that many of the major tenant groups in Midtown, primarily the financial sector, have not been growing.

Midtown South, meanwhile, which has captured the imagination of tech and creative firms, has seen brisk leasing because these sectors have been thriving and expanding.

“The tenants that are growing are the advertising and tech tenants right now, which are centered in Midtown South,” said Bill Elder, a top executive and leasing director at RXR Realty, a landlord that saw the potential of Midtown South and invested heavily there in past months, buying the Starrett-Lehigh Building and 620 Avenue of the Americas. “The large financial institutions are not growing right now; they’re stable at best. And that’s based largely in Midtown.”

Yet RXR Realty has hosted growth in its Midtown portfolio too, by catering to smaller users.

Artisan Partners, an investment management firm, moved into 1330 Avenue of the Americas, a building RXR owns in Midtown at the beginning of the year, committing to nearly 6,000 square feet. The company signed an almost 6,000-square-foot expansion in recent days.

Numerous theories have emerged as to why bigger tenants have been sluggish to take space, with the general sentiment being that more sizeable companies are more coupled to persistent economic headwinds, global problems such as the European debt crisis and the uncertainties created by the presidential election.

“Everyone is generally trying to be very intelligent with their space utilization, doing more with less,” said Neil Goldmacher, a top leasing executive at Newmark Grubb Knight Frank.

“The market is going to continue to see that compression.”

]]>http://commercialobserver.com/2012/11/the-incredible-shrinking-tenant/feed/0WEBmidtown_final_joelkimmelBrooklyn Buzz: From Spike Lee to Etsy, C&W’s Glenn Markman Has BK Downhttp://commercialobserver.com/2012/10/brooklyn-buzz-from-spike-lee-to-etsy-cushman-wakefields-glenn-markman-has-bk-cornered/#commentshttp://commercialobserver.com/2012/10/brooklyn-buzz-from-spike-lee-to-etsy-cushman-wakefields-glenn-markman-has-bk-cornered/
Daniel Geigerhttp://commercialobserver.com/?p=241837Glenn Markman first began to pay attention to Brooklyn long before there was a Barclays Center to crystallize the borough’s rise.

Like so many success stories in real estate, buying in early was key.

Having done deals in Brooklyn for 20 years, Mr. Markman by now is known as an expert in office leasing in the borough, though he is also prolific in Manhattan. From his résumé, there’s no mistaking his prominence as a Brooklyn dealmaker.

In 2008, he represented Spike Lee in finding a Dumbo office for the film director’s advertising company, Spike DDB.

Earlier this year, when the Brooklyn Nets decided to relocate the team’s executive offices from New Jersey to be closer to the new Barclays arena, Mr. Markman, who is a leasing executive at Cushman & Wakefield, led a C&W team that brought the Nets into 35,000 square feet at 15 MetroTech Center in Downtown Brooklyn.

Glenn Markman.

Along with C&W’s chairman of global brokerage, Bruce Mosler, Mr. Markman is currently in the process of conducting a search for a large new practice facility for the team.

Mr. Markman has done notable deals outside of Brooklyn, too. In the late 1990s, he convinced the NBA to open a prominent store where it could both sell its merchandise and broadcast its brand at 666 Fifth Avenue, one of city’s most storied retail addresses. He represented the fashion apparel company Michael Kors in taking office space at 11 West 42nd Street, where it has grown to about 100,000 square feet. He has also done jumbo-size leases: in the late 1990s he was part of a Grubb & Ellis team that represented the New York City Housing Authority in a roughly 500,000-square-foot deal at 90 Church Street.

But it has been Brooklyn with which Mr. Markman’s reputation has become closely linked; it both paved the way for his career and has kept his pipeline flush with the kinds of creative deals he prizes.

At about 7 million square feet, the commercial office neighborhood in the borough is a fraction of the size of the nearly 400-million-square-foot Manhattan market. Yet command of the Brooklyn market has never been a better skill set to have as more companies are crowding into an area increasingly considered the pinnacle of culture and lifestyle in the city.

“Brooklyn is igniting this incredible passion from creative companies in Manhattan,” Mr. Markman said. “Brooklyn buzz combined with scarcity of space and increasing rental rates in areas like Midtown South are pushing more companies to come to the borough and providing the opportunity for the area to land blue-chip creative firms.”

Earlier this year, Mr. Markman represented one such company, a firm called MakerBot, which manufactures 3D printers, in a deal to take about 35,000 square feet at 15 MetroTech. The lease was typical of the kind of transaction Mr. Markman has sought to focus his career on: an innovative tenant coming to a space that could help unlock its potential and spur its growth.

Mr. Markman doesn’t profess to be an artist, but he clearly has an affinity for the creative. His wife is a full-time painter. In his office, he has eye-catching abstract paintings that he commissioned from an artist he is friendly with. The vicarious thrill he gets from lending his services to help businesses like MakerBot animates him far more than more routine deals that are larger in size and thus more lucrative.

“The kind of tenants that I work with has always been the most important thing for me,” Mr. Markman said. “Getting to work with interesting, creative companies and helping them to get where they want to go and the transformational part of real estate for them is what I’ve focused on. Changing their environment is ultimately going to change how they go about doing their business.”

A few years ago, he was introduced to Spike Lee, who wanted space for his advertising company. Mr. Markman, who says he is fixated on being punctual, noticed that Mr. Lee showed up to meetings even earlier than he did.

“He’s 15 minutes early, and he’s balancing five things at the same time,” said Mr. Markman. “He doesn’t have a handler or an assistant. The opportunity to work with someone like him is what the business is about for me.”

Mr. Lee’s preference was to buy a building, preferably a firehouse, in Fort Greene or an area nearby and then set up shop. Mr. Markman knew that such a strategy would be a long shot; real estate investors would clamor for such an asset, and the likelihood of finding an available property of that type was remote.

“Spike is a one-in-a-million type of guy, so who’s to say he can’t make a one-in-a-million real estate deal?” Mr. Markman said. “I leveled with him. If you want a firehouse, I’m not your guy. But I can get you a place that will give you a vibe and the right environment.”

Mr. Lee reconsidered, and Mr. Markman brought the firm to a space at 55 Washington Street in Dumbo, an area that has increasingly become a rival to popular submarkets of Midtown South, such as Chelsea and the Meatpacking District, as a home for tech and creative companies. A year later, in 2009, Mr. Markman moved Etsy.com, the online retailer of handcrafted, small-batch products such as jewelry and art, to the same building.

Mr. Markman’s start in Brooklyn leasing wasn’t driven by a premonition of the potential that is so evident there today. It was the early 1990s, and his brother, Greg, who had recently graduated college, was not enthused at the prospect of having to put on a suit. Greg decided instead that he would open a restaurant on Montague Street in Brooklyn Heights. Glenn, who was then with the firm Grubb & Ellis, went to work finding him a space.

Mr. Markman had grown up in Bensonhurst and left it behind for an apartment in Manhattan as soon as he graduated from college. While getting acquainted with the nightlife and dining scene of Brooklyn Heights and Downtown Brooklyn in the search on behalf of his brother, he could feel the area’s up-and-coming vibe. As he would be at other important junctures in his career, Mr. Markman was struck by a sense of opportunity.

Like any young broker, he was struggling to do lucrative deals with major tenants in Manhattan. Mr. Markman, however, knew that large companies took space at places like the MetroTech Center, especially for back-office functions. At the time, these were little-noticed deals, and few leasing brokers of any importance were making Brooklyn a priority. The area was
wide open for an ambitious young upstart.

Through a connection with the real estate executive Michael Fascitelli, now the chief executive officer of Vornado Realty Trust but then a partner at Goldman Sachs, Mr. Markman began to handle some sublease space that Goldman was trying to dispose of at the office building 1 Pierrepont Plaza. He eventually subleased two floors to the U.S. Attorney in a roughly 70,000-square-foot deal. Soon after, he subleased another floor in the skyscraper from the Royal Bank of Canada to the same tenant.

“I couldn’t have worked on transactions of that ilk with those kinds of tenants in Manhattan so early in my career,” Mr. Markman said. “By doing those deals in Brooklyn, I accelerated my career incredibly and tapped opportunities I never would have otherwise had.”

Mr. Markman found other openings for advancement, and not just in Brooklyn. Fresh off his success in that borough, he was riding one day in a cab through Midtown when he noticed Disney and Warner Bros. both had retail stores. He had just read an article about the tremendous profits the NBA was netting from its merchandise. Why didn’t it have a store too, he wondered.

“I wound up contacting them and pitching the idea,” Mr. Markman said.

His vision culminated in a 35,000-square-foot lease for an NBA store at 666 Fifth Avenue, with a starting rent of nearly $3 million annually—then one of the most lucrative deals ever done in the city for a retail space.

Aside from his brokerage work, Mr. Markman now owns two Brooklyn restaurants with his brother. It was while riding on the No. 4 train to one of them, Della Rocco’s Brick Oven Pizza, that he noticed how big Brooklyn had become.

“I realized [all these older women] were heading to the Barbara Streisand concert at Barclays,” Mr. Markman said. “These people would never take the 4—they would never ever take the train to Brooklyn. And yet here they were all heading to Barclays, and it really dawned on me: This thing is big.”

]]>Glenn Markman first began to pay attention to Brooklyn long before there was a Barclays Center to crystallize the borough’s rise.

Like so many success stories in real estate, buying in early was key.

Having done deals in Brooklyn for 20 years, Mr. Markman by now is known as an expert in office leasing in the borough, though he is also prolific in Manhattan. From his résumé, there’s no mistaking his prominence as a Brooklyn dealmaker.

In 2008, he represented Spike Lee in finding a Dumbo office for the film director’s advertising company, Spike DDB.

Earlier this year, when the Brooklyn Nets decided to relocate the team’s executive offices from New Jersey to be closer to the new Barclays arena, Mr. Markman, who is a leasing executive at Cushman & Wakefield, led a C&W team that brought the Nets into 35,000 square feet at 15 MetroTech Center in Downtown Brooklyn.

Glenn Markman.

Along with C&W’s chairman of global brokerage, Bruce Mosler, Mr. Markman is currently in the process of conducting a search for a large new practice facility for the team.

Mr. Markman has done notable deals outside of Brooklyn, too. In the late 1990s, he convinced the NBA to open a prominent store where it could both sell its merchandise and broadcast its brand at 666 Fifth Avenue, one of city’s most storied retail addresses. He represented the fashion apparel company Michael Kors in taking office space at 11 West 42nd Street, where it has grown to about 100,000 square feet. He has also done jumbo-size leases: in the late 1990s he was part of a Grubb & Ellis team that represented the New York City Housing Authority in a roughly 500,000-square-foot deal at 90 Church Street.

But it has been Brooklyn with which Mr. Markman’s reputation has become closely linked; it both paved the way for his career and has kept his pipeline flush with the kinds of creative deals he prizes.

At about 7 million square feet, the commercial office neighborhood in the borough is a fraction of the size of the nearly 400-million-square-foot Manhattan market. Yet command of the Brooklyn market has never been a better skill set to have as more companies are crowding into an area increasingly considered the pinnacle of culture and lifestyle in the city.

“Brooklyn is igniting this incredible passion from creative companies in Manhattan,” Mr. Markman said. “Brooklyn buzz combined with scarcity of space and increasing rental rates in areas like Midtown South are pushing more companies to come to the borough and providing the opportunity for the area to land blue-chip creative firms.”

Earlier this year, Mr. Markman represented one such company, a firm called MakerBot, which manufactures 3D printers, in a deal to take about 35,000 square feet at 15 MetroTech. The lease was typical of the kind of transaction Mr. Markman has sought to focus his career on: an innovative tenant coming to a space that could help unlock its potential and spur its growth.

Mr. Markman doesn’t profess to be an artist, but he clearly has an affinity for the creative. His wife is a full-time painter. In his office, he has eye-catching abstract paintings that he commissioned from an artist he is friendly with. The vicarious thrill he gets from lending his services to help businesses like MakerBot animates him far more than more routine deals that are larger in size and thus more lucrative.

“The kind of tenants that I work with has always been the most important thing for me,” Mr. Markman said. “Getting to work with interesting, creative companies and helping them to get where they want to go and the transformational part of real estate for them is what I’ve focused on. Changing their environment is ultimately going to change how they go about doing their business.”

A few years ago, he was introduced to Spike Lee, who wanted space for his advertising company. Mr. Markman, who says he is fixated on being punctual, noticed that Mr. Lee showed up to meetings even earlier than he did.

“He’s 15 minutes early, and he’s balancing five things at the same time,” said Mr. Markman. “He doesn’t have a handler or an assistant. The opportunity to work with someone like him is what the business is about for me.”

Mr. Lee’s preference was to buy a building, preferably a firehouse, in Fort Greene or an area nearby and then set up shop. Mr. Markman knew that such a strategy would be a long shot; real estate investors would clamor for such an asset, and the likelihood of finding an available property of that type was remote.

“Spike is a one-in-a-million type of guy, so who’s to say he can’t make a one-in-a-million real estate deal?” Mr. Markman said. “I leveled with him. If you want a firehouse, I’m not your guy. But I can get you a place that will give you a vibe and the right environment.”

Mr. Lee reconsidered, and Mr. Markman brought the firm to a space at 55 Washington Street in Dumbo, an area that has increasingly become a rival to popular submarkets of Midtown South, such as Chelsea and the Meatpacking District, as a home for tech and creative companies. A year later, in 2009, Mr. Markman moved Etsy.com, the online retailer of handcrafted, small-batch products such as jewelry and art, to the same building.

Mr. Markman’s start in Brooklyn leasing wasn’t driven by a premonition of the potential that is so evident there today. It was the early 1990s, and his brother, Greg, who had recently graduated college, was not enthused at the prospect of having to put on a suit. Greg decided instead that he would open a restaurant on Montague Street in Brooklyn Heights. Glenn, who was then with the firm Grubb & Ellis, went to work finding him a space.

Mr. Markman had grown up in Bensonhurst and left it behind for an apartment in Manhattan as soon as he graduated from college. While getting acquainted with the nightlife and dining scene of Brooklyn Heights and Downtown Brooklyn in the search on behalf of his brother, he could feel the area’s up-and-coming vibe. As he would be at other important junctures in his career, Mr. Markman was struck by a sense of opportunity.

Like any young broker, he was struggling to do lucrative deals with major tenants in Manhattan. Mr. Markman, however, knew that large companies took space at places like the MetroTech Center, especially for back-office functions. At the time, these were little-noticed deals, and few leasing brokers of any importance were making Brooklyn a priority. The area was
wide open for an ambitious young upstart.

Through a connection with the real estate executive Michael Fascitelli, now the chief executive officer of Vornado Realty Trust but then a partner at Goldman Sachs, Mr. Markman began to handle some sublease space that Goldman was trying to dispose of at the office building 1 Pierrepont Plaza. He eventually subleased two floors to the U.S. Attorney in a roughly 70,000-square-foot deal. Soon after, he subleased another floor in the skyscraper from the Royal Bank of Canada to the same tenant.

“I couldn’t have worked on transactions of that ilk with those kinds of tenants in Manhattan so early in my career,” Mr. Markman said. “By doing those deals in Brooklyn, I accelerated my career incredibly and tapped opportunities I never would have otherwise had.”

Mr. Markman found other openings for advancement, and not just in Brooklyn. Fresh off his success in that borough, he was riding one day in a cab through Midtown when he noticed Disney and Warner Bros. both had retail stores. He had just read an article about the tremendous profits the NBA was netting from its merchandise. Why didn’t it have a store too, he wondered.

“I wound up contacting them and pitching the idea,” Mr. Markman said.

His vision culminated in a 35,000-square-foot lease for an NBA store at 666 Fifth Avenue, with a starting rent of nearly $3 million annually—then one of the most lucrative deals ever done in the city for a retail space.

Aside from his brokerage work, Mr. Markman now owns two Brooklyn restaurants with his brother. It was while riding on the No. 4 train to one of them, Della Rocco’s Brick Oven Pizza, that he noticed how big Brooklyn had become.

“I realized [all these older women] were heading to the Barbara Streisand concert at Barclays,” Mr. Markman said. “These people would never take the 4—they would never ever take the train to Brooklyn. And yet here they were all heading to Barclays, and it really dawned on me: This thing is big.”

]]>http://commercialobserver.com/2012/10/brooklyn-buzz-from-spike-lee-to-etsy-cushman-wakefields-glenn-markman-has-bk-cornered/feed/0rsz_1glennmarkman_20Lower Manhattan’s Growing Painshttp://commercialobserver.com/2012/10/lower-manhattans-growing-pains/#commentshttp://commercialobserver.com/2012/10/lower-manhattans-growing-pains/
Daniel Geigerhttp://commercialobserver.com/?p=241660Gleaming new skyscrapers are rising, and more are planned. A cavernous retail complex that was once the highest-grossing shopping mall in the country is being reborn. The biggest and boldest investment in grand transit infrastructure in a generation is winding its way toward completion.

There’s no doubt that Lower Manhattan, with its blooming residential population, is not the office district it was a decade ago. During the recession, while other areas of the city like Midtown were wilting as tenants cast space onto the market and leasing activity plunged, the area, which experts were initially concerned would suffer the worst of the downturn, unexpectedly held its own.

Downtown’s sparkling newness, combined with its economy—space there comes at a substantial discount to Midtown North and South—has already drawn big tenants who believe it will be the city’s commercial district of the future.

Last year, Condé Nast signed a lease in excess of 1 million square feet at 1 World Trade Center, a deal that was perhaps even more beneficial to lower Manhattan than all its construction projects combined, thanks to what analysts describe as the company’s ability transform the area’s staid image. As exciting as all the progress is, lower Manhattan success stories, as they often do, come with caveats.

Illustration by Joel Kimmel.

A little more than a decade ago, riding high on the dot-com boom, the neighborhood’s availability rate shrunk to a record low 4.4 percent, according to statistics compiled by the real estate services firm CBRE. But by 2003, only three years later, the good times were over. That rate, which measures present vacancy and space that is expected to empty in the succeeding 12 months, skyrocketed to 15.4 percent after the tech sector went bust and the economy fell into a recession in the wake of 9/11.

Although CBRE currently measures availability at a historically healthy 10.6 percent, downside risks, ever-present in an area susceptible to quick-paced periods of deterioration, faces daunting upcoming vacancy. Next year, Bank of America is expected to give back about 2 million square feet at the World Financial Center.

An 850,000-square-foot block of space at 180 Maiden Lane currently occupied by AIG could also come available when it expires in 2014. Meanwhile, millions of square feet of vacant space will be introduced at the World Trade Center, where two office towers are under construction.

“Vacancy could fast rise to over 17 percent,” Robert Sammons, an economist and market analyst at the real estate services firm Cassidy Turley, told The Commercial Observer.

Taking into account all the space that could become empty, Mr. Sammons projected a vacancy rate of nearly 18 percent in lower Manhattan only a little over two years from now, in 2015. That would be the highest rate since the 1990s, when the area went through serious turmoil in the aftermath of the economic downturn of the early part of the decade and up to a quarter of the area’s space was vacant.

The downside risk has clearly caught the attention of the neighborhood’s biggest stakeholders. Brookfield Office Properties, the REIT that owns the World Financial Center office towers Downtown, has invested over $250 million in the 8-million-square-foot complex to redo its retail and dining space and create a connection with the World Trade Center.

Last week, as was first revealed by The Commercial Observer, the company said it would change the name of the World Financial Center complex to Brookfield Place, in what appears to be bid to reposition the image of the towers away from being a home for financial-sector tenants, whose appetite for space in the age of Dodd-Frank has continued to lag, to appeal to a broader audience. Some real estate experts also saw it as a bid to differentiate the similar-sounding towers from the World Trade Center site, which increasingly have appeared as competitors to Brookfield’s complex.

“The World Financial Center is a 25-year-old brand that has, to a certain degree, been in the shadow of the World Trade Center,” Andrew Peretz, a leasing executive at the services firm Cushman & Wakefield who specializes in leasing markets in Lower Manhattan and Midtown South, told The Commercial Observer. “It deserves its own identity. Brookfield is making a huge investment in the complex.”

Solid investment in buildings in the area has yielded results for other landlords. Mark Ravesloot, a vice chairman at CBRE, recently handled a number of recent deals at 100 William Street, an office building owned by the Japanese real estate investment company Mitsui Fudosan. Mr. Ravesloot said Mitsui poured millions of dollars into updating the building’s lobby, elevators and other renovations. As a result, Mr. Ravesloot and his team have been able to lease over 200,000 square feet at the property in the two years since the overhaul was done, bringing it to near full occupancy—even as activity market-wide has slowed over the past year.

Even more vacancy could come available Downtown if a large deal with the advertising and media firm GroupM comes to fruition at 3 World Trade Center, an over 2-million-square-foot building that would proceed if the company decides to anchor it—a commitment it has been rumored to be considering.

As big block after big block awaits the market, the pace of large-sized deals has ominously slowed. According to CBRE, there are currently 14 blocks of space larger than 100,000 square feet in Lower Manhattan, compared with eight a year ago. So far this year, four deals in excess of 100,000 square feet have been signed, totaling 770,000 square feet of leasing. Last year, eight deals in this size category were completed during the same period, accounting for over 2 million square feet of leases.

The lack of big deals, the prospect of a glut of space and the heightened competition among landlords would appear to underscore the sizeable investment Brookfield is making at the World Financial Center and its decision to change its moniker.

“They are definitely facing a challenge,” one veteran Downtown leasing executive said, asking for anonymity because he was wary to openly disparage the area’s biggest landlord.

But there is a flip side to Lower Manhattan’s predicament. The neighborhood has long offered tenants a substantial discount to Midtown. Now, with the popularity of Midtown South and the rent spike there that has resulted, it can effectively undercut a whole new segment of the city.

“The thing about the vacancy Downtown is that this is great space, first-rate Class A product, and it’s going to be attractive to tenants,” James Delmonte, an economist at the services firm Avison Young said.

“A decade ago, a lot of the vacancy was in buildings that were antiquated and that were eventually converted to residential. It’s not clear what the pricing at the World Financial Center is going to be ultimately, but it could be an affordable opportunity, and there are always going to be tenants who will take a deal like that.”

dgeiger@observer.com

]]>Gleaming new skyscrapers are rising, and more are planned. A cavernous retail complex that was once the highest-grossing shopping mall in the country is being reborn. The biggest and boldest investment in grand transit infrastructure in a generation is winding its way toward completion.

There’s no doubt that Lower Manhattan, with its blooming residential population, is not the office district it was a decade ago. During the recession, while other areas of the city like Midtown were wilting as tenants cast space onto the market and leasing activity plunged, the area, which experts were initially concerned would suffer the worst of the downturn, unexpectedly held its own.

Downtown’s sparkling newness, combined with its economy—space there comes at a substantial discount to Midtown North and South—has already drawn big tenants who believe it will be the city’s commercial district of the future.

Last year, Condé Nast signed a lease in excess of 1 million square feet at 1 World Trade Center, a deal that was perhaps even more beneficial to lower Manhattan than all its construction projects combined, thanks to what analysts describe as the company’s ability transform the area’s staid image. As exciting as all the progress is, lower Manhattan success stories, as they often do, come with caveats.

Illustration by Joel Kimmel.

A little more than a decade ago, riding high on the dot-com boom, the neighborhood’s availability rate shrunk to a record low 4.4 percent, according to statistics compiled by the real estate services firm CBRE. But by 2003, only three years later, the good times were over. That rate, which measures present vacancy and space that is expected to empty in the succeeding 12 months, skyrocketed to 15.4 percent after the tech sector went bust and the economy fell into a recession in the wake of 9/11.

Although CBRE currently measures availability at a historically healthy 10.6 percent, downside risks, ever-present in an area susceptible to quick-paced periods of deterioration, faces daunting upcoming vacancy. Next year, Bank of America is expected to give back about 2 million square feet at the World Financial Center.

An 850,000-square-foot block of space at 180 Maiden Lane currently occupied by AIG could also come available when it expires in 2014. Meanwhile, millions of square feet of vacant space will be introduced at the World Trade Center, where two office towers are under construction.

“Vacancy could fast rise to over 17 percent,” Robert Sammons, an economist and market analyst at the real estate services firm Cassidy Turley, told The Commercial Observer.

Taking into account all the space that could become empty, Mr. Sammons projected a vacancy rate of nearly 18 percent in lower Manhattan only a little over two years from now, in 2015. That would be the highest rate since the 1990s, when the area went through serious turmoil in the aftermath of the economic downturn of the early part of the decade and up to a quarter of the area’s space was vacant.

The downside risk has clearly caught the attention of the neighborhood’s biggest stakeholders. Brookfield Office Properties, the REIT that owns the World Financial Center office towers Downtown, has invested over $250 million in the 8-million-square-foot complex to redo its retail and dining space and create a connection with the World Trade Center.

Last week, as was first revealed by The Commercial Observer, the company said it would change the name of the World Financial Center complex to Brookfield Place, in what appears to be bid to reposition the image of the towers away from being a home for financial-sector tenants, whose appetite for space in the age of Dodd-Frank has continued to lag, to appeal to a broader audience. Some real estate experts also saw it as a bid to differentiate the similar-sounding towers from the World Trade Center site, which increasingly have appeared as competitors to Brookfield’s complex.

“The World Financial Center is a 25-year-old brand that has, to a certain degree, been in the shadow of the World Trade Center,” Andrew Peretz, a leasing executive at the services firm Cushman & Wakefield who specializes in leasing markets in Lower Manhattan and Midtown South, told The Commercial Observer. “It deserves its own identity. Brookfield is making a huge investment in the complex.”

Solid investment in buildings in the area has yielded results for other landlords. Mark Ravesloot, a vice chairman at CBRE, recently handled a number of recent deals at 100 William Street, an office building owned by the Japanese real estate investment company Mitsui Fudosan. Mr. Ravesloot said Mitsui poured millions of dollars into updating the building’s lobby, elevators and other renovations. As a result, Mr. Ravesloot and his team have been able to lease over 200,000 square feet at the property in the two years since the overhaul was done, bringing it to near full occupancy—even as activity market-wide has slowed over the past year.

Even more vacancy could come available Downtown if a large deal with the advertising and media firm GroupM comes to fruition at 3 World Trade Center, an over 2-million-square-foot building that would proceed if the company decides to anchor it—a commitment it has been rumored to be considering.

As big block after big block awaits the market, the pace of large-sized deals has ominously slowed. According to CBRE, there are currently 14 blocks of space larger than 100,000 square feet in Lower Manhattan, compared with eight a year ago. So far this year, four deals in excess of 100,000 square feet have been signed, totaling 770,000 square feet of leasing. Last year, eight deals in this size category were completed during the same period, accounting for over 2 million square feet of leases.

The lack of big deals, the prospect of a glut of space and the heightened competition among landlords would appear to underscore the sizeable investment Brookfield is making at the World Financial Center and its decision to change its moniker.

“They are definitely facing a challenge,” one veteran Downtown leasing executive said, asking for anonymity because he was wary to openly disparage the area’s biggest landlord.

But there is a flip side to Lower Manhattan’s predicament. The neighborhood has long offered tenants a substantial discount to Midtown. Now, with the popularity of Midtown South and the rent spike there that has resulted, it can effectively undercut a whole new segment of the city.

“The thing about the vacancy Downtown is that this is great space, first-rate Class A product, and it’s going to be attractive to tenants,” James Delmonte, an economist at the services firm Avison Young said.

“A decade ago, a lot of the vacancy was in buildings that were antiquated and that were eventually converted to residential. It’s not clear what the pricing at the World Financial Center is going to be ultimately, but it could be an affordable opportunity, and there are always going to be tenants who will take a deal like that.”

dgeiger@observer.com

]]>http://commercialobserver.com/2012/10/lower-manhattans-growing-pains/feed/0WEB_LowerManhattanCover_JoelKimmelCohen Taps C&W Team to Patch Another Third Avenue Holehttp://commercialobserver.com/2012/10/cohen-taps-cw-team-to-patch-another-third-avenue-hole/#commentshttp://commercialobserver.com/2012/10/cohen-taps-cw-team-to-patch-another-third-avenue-hole/
Daniel Geigerhttp://commercialobserver.com/?p=241597Landlord Charles Cohen is gearing up for vacancy at 622 Third Avenue.

The nearly 900,000-square-foot office tower has about 200,000 square feet of space that Mr. Cohen says is soon set to come available as several leases at the property expire.

Charles Cohen

The empty space is the latest challenge in a portfolio that has seen other vacancies in recent years. Last year ASME vacated another office tower owned by Mr. Cohen, Three Park Avenue, leaving behind about 100,000 square feet at the property. Guggenheim Partners, a large investment firm also left 135 West 57th Street, another Cohen tower.

Mr. Cohen has dealt with such departures before. In 2010, a leasing team he hired from the real estate services firm Cushman & Wakefield led by C&W’s chairman of global brokerage Bruce Mosler, arranged an over 200,000-square-foot lease at 805 Third Avenue, a building owned by Mr. Cohen’s family-run real estate firm Cohen Brothers Realty.

Mr. Cohen told The Commercial Observer he plans to complete renovation work on 622 Third Avenue as well as other properties he owns in order to make them more desirable to tenants during a period of slow leasing activity in Midtown.

“622 Third has very efficient column layouts and nine foot high ceilings that will make it attractive to a host of users,” Mr. Cohen said. “Right now we’re doing new elevators and we’re going to do the entire lobby. I would say we’ll spend about $5 million doing the work.”

In addition to the face lift at 622 Third Avenue, Mr. Cohen said he will renovate Three Park Avenue, an overhaul that will include a makeover of the building’s lobby. He is also in the process of significantly renovating 475 Park Avenue South, another tower he owns, including replacing the building’s facade and redoing its lobby.

“We are always reinvesting in our buildings,” Mr. Cohen said.

Mr. Mosler will lead the effort to fill the space at 622 Third Avenue.

“The building’s floorplates really stand out for Third Avenue, which has a lot of irregular shaped spaces,” Mr. Mosler said. “This building was well designed. It’s hard to get big floors that are column free and uniformly rectangular on the avenue like this.”

Third Avenue is generally more impacted by leasing slowdowns than other areas of Midtown because it is at the periphery of the market. Mr. Cohen said he believes strongly in the area’s desirability.

“Third Avenue is a corridor my family pioneered, my father and his brother built 805 Third Avenue in the late 1970s,” Mr. Cohen said. “We know Third really well and we understand it. It’s our neighborhood and given its proximity to the center of Midtown, we feel it’s the best deal in town.”

Mr. Cohen said he was seeking rents in the $50s and $60s at 622 Third Avenue.

]]>Landlord Charles Cohen is gearing up for vacancy at 622 Third Avenue.

The nearly 900,000-square-foot office tower has about 200,000 square feet of space that Mr. Cohen says is soon set to come available as several leases at the property expire.

Charles Cohen

The empty space is the latest challenge in a portfolio that has seen other vacancies in recent years. Last year ASME vacated another office tower owned by Mr. Cohen, Three Park Avenue, leaving behind about 100,000 square feet at the property. Guggenheim Partners, a large investment firm also left 135 West 57th Street, another Cohen tower.

Mr. Cohen has dealt with such departures before. In 2010, a leasing team he hired from the real estate services firm Cushman & Wakefield led by C&W’s chairman of global brokerage Bruce Mosler, arranged an over 200,000-square-foot lease at 805 Third Avenue, a building owned by Mr. Cohen’s family-run real estate firm Cohen Brothers Realty.

Mr. Cohen told The Commercial Observer he plans to complete renovation work on 622 Third Avenue as well as other properties he owns in order to make them more desirable to tenants during a period of slow leasing activity in Midtown.

“622 Third has very efficient column layouts and nine foot high ceilings that will make it attractive to a host of users,” Mr. Cohen said. “Right now we’re doing new elevators and we’re going to do the entire lobby. I would say we’ll spend about $5 million doing the work.”

In addition to the face lift at 622 Third Avenue, Mr. Cohen said he will renovate Three Park Avenue, an overhaul that will include a makeover of the building’s lobby. He is also in the process of significantly renovating 475 Park Avenue South, another tower he owns, including replacing the building’s facade and redoing its lobby.

“We are always reinvesting in our buildings,” Mr. Cohen said.

Mr. Mosler will lead the effort to fill the space at 622 Third Avenue.

“The building’s floorplates really stand out for Third Avenue, which has a lot of irregular shaped spaces,” Mr. Mosler said. “This building was well designed. It’s hard to get big floors that are column free and uniformly rectangular on the avenue like this.”

Third Avenue is generally more impacted by leasing slowdowns than other areas of Midtown because it is at the periphery of the market. Mr. Cohen said he believes strongly in the area’s desirability.

“Third Avenue is a corridor my family pioneered, my father and his brother built 805 Third Avenue in the late 1970s,” Mr. Cohen said. “We know Third really well and we understand it. It’s our neighborhood and given its proximity to the center of Midtown, we feel it’s the best deal in town.”

Mr. Cohen said he was seeking rents in the $50s and $60s at 622 Third Avenue.

]]>http://commercialobserver.com/2012/10/cohen-taps-cw-team-to-patch-another-third-avenue-hole/feed/0Brookfield to Rename World Financial Centerhttp://commercialobserver.com/2012/10/brookfield-to-rename-world-financial-center/#commentshttp://commercialobserver.com/2012/10/brookfield-to-rename-world-financial-center/
Daniel Geigerhttp://commercialobserver.com/?p=241531Brookfield Properties will rename the eight million-square-foot office complex it owns in Lower Manhattan several sources familiar with the company’s plans say.

What is known currently as the World Financial Center will become Brookfield Place under the plan, in what appears to be an effort to distance the property’s image as a home predominantly for financial tenants at a time when leasing demand from that sector has been weak.

World Financial Center

Brookfield, a large real estate investment trust that owns millions of square feet of commercial space across the U.S. and Canada, is gearing up to lease over two million square feet of space at the complex next year, when Bank of America, Nomura and other tenants are expected leave or downsize.

“It’s not going to happen overnight,” one person briefed on the plan said. “But Brookfield plans to phase in the new name increasingly over time.”

The four buildings, known as One through Four World Financial Center, will be referred to individually by their street addresses going forward, 200 and 225 Liberty Street and 200 and 250 Vesey Street.

Questions and concerns have persisted about the challenge of filling the massive vacancy that is expected to open at the property midway through 2013, especially as leasing activity has slowed in the city and big tenants have appeared especially cautious in making real estate commitments.

Although the World Financial Center is considered one of Downtown’s highest quality offerings, it is facing increased competition, including from the millions of square feet of office space being built just across West Street at the World Trade Center site.

Last year Conde Nast signed an over one million-square-foot office lease at One World Trade Center, which itself had been rebranded away from its former moniker, the Freedom Tower, which many real estate experts said only conjured negative associations with 9/11 and terrorism. The Conde deal appeared to herald a new era for Lower Manhattan in which a broader array of industries, including creative companies in fast growing sectors such as media and technology, would come the neighborhood - a trend that Brookfield would appear eager to cater to with the name change.

Brookfield has made efforts to increase the desirability of the World Financial Center, investing over $250 million to overhaul the property’s 200,000 square feet of retail space and build a connection in the Winter Garden that will connect to the subterranean pedestrian corridor running east under the World Trade Center site to the Fulton Street subway station.

A spokeswoman at Brookfield did not immediately return calls seeking comment.

]]>Brookfield Properties will rename the eight million-square-foot office complex it owns in Lower Manhattan several sources familiar with the company’s plans say.

What is known currently as the World Financial Center will become Brookfield Place under the plan, in what appears to be an effort to distance the property’s image as a home predominantly for financial tenants at a time when leasing demand from that sector has been weak.

World Financial Center

Brookfield, a large real estate investment trust that owns millions of square feet of commercial space across the U.S. and Canada, is gearing up to lease over two million square feet of space at the complex next year, when Bank of America, Nomura and other tenants are expected leave or downsize.

“It’s not going to happen overnight,” one person briefed on the plan said. “But Brookfield plans to phase in the new name increasingly over time.”

The four buildings, known as One through Four World Financial Center, will be referred to individually by their street addresses going forward, 200 and 225 Liberty Street and 200 and 250 Vesey Street.

Questions and concerns have persisted about the challenge of filling the massive vacancy that is expected to open at the property midway through 2013, especially as leasing activity has slowed in the city and big tenants have appeared especially cautious in making real estate commitments.

Although the World Financial Center is considered one of Downtown’s highest quality offerings, it is facing increased competition, including from the millions of square feet of office space being built just across West Street at the World Trade Center site.

Last year Conde Nast signed an over one million-square-foot office lease at One World Trade Center, which itself had been rebranded away from its former moniker, the Freedom Tower, which many real estate experts said only conjured negative associations with 9/11 and terrorism. The Conde deal appeared to herald a new era for Lower Manhattan in which a broader array of industries, including creative companies in fast growing sectors such as media and technology, would come the neighborhood - a trend that Brookfield would appear eager to cater to with the name change.

Brookfield has made efforts to increase the desirability of the World Financial Center, investing over $250 million to overhaul the property’s 200,000 square feet of retail space and build a connection in the Winter Garden that will connect to the subterranean pedestrian corridor running east under the World Trade Center site to the Fulton Street subway station.

A spokeswoman at Brookfield did not immediately return calls seeking comment.

]]>http://commercialobserver.com/2012/10/brookfield-to-rename-world-financial-center/feed/1After Successful IPO, Shutterstock Plans to Move Into Bigger Office Downtownhttp://commercialobserver.com/2012/10/after-successful-ipo-shutterstock-plans-to-move-into-bigger-office-downtown/#commentshttp://commercialobserver.com/2012/10/after-successful-ipo-shutterstock-plans-to-move-into-bigger-office-downtown/
Daniel Geigerhttp://commercialobserver.com/?p=241499Fresh from a successful $120 million IPO, Shutterstock is making plans to significantly grow in Lower Manhattan.

The firm is in negotiations to lease two floors at 199 Water Street totaling about 70,000 square feet several sources familiar with the company say.

Shutterstock was begun a decade ago by the entrepreneur Jon Oringer as an online image and video repository aimed at undercutting more established rivals like Getty Images. Mr. Oringer grew the business by building a vast trove of content sourced from an open platform of online contributors. Late last month, the company was the first tech firm in the city since the recession to launch a successful public offering of its stock.

Shutterstock is currently located at the Downtown office building 60 Broad Street, where it occupies about 30,000 square feet, half of what it is in negotiations to take at 199 Water Street. The company is looking to take floors 14 and 15 in the deal at 199 Water Street. The new offices will allow the firm to space its operations on fewer floors than at 60 Broad Street, which has smaller 12,000 square foot floors. Being spread across fewer levels is generally considered a more efficient layout for tenants.

Asking rents for the space at 199 Water Street, which is owned by Jack Resnick & Sons, are in the mid $40s per square foot.

Paul Ippolito, a leasing executive at Newmark Grubb Knight Frank, is representing Shutterstock in its search and negotiations for space.

Mr. Ippolito did not immediately return a call seeking comment. An email to Shutterstock’s online-only press apparatus was not immediately returned. Executives at Jack Resnick & Sons also couldn’t be reached.

]]>Fresh from a successful $120 million IPO, Shutterstock is making plans to significantly grow in Lower Manhattan.

The firm is in negotiations to lease two floors at 199 Water Street totaling about 70,000 square feet several sources familiar with the company say.

Shutterstock was begun a decade ago by the entrepreneur Jon Oringer as an online image and video repository aimed at undercutting more established rivals like Getty Images. Mr. Oringer grew the business by building a vast trove of content sourced from an open platform of online contributors. Late last month, the company was the first tech firm in the city since the recession to launch a successful public offering of its stock.

Shutterstock is currently located at the Downtown office building 60 Broad Street, where it occupies about 30,000 square feet, half of what it is in negotiations to take at 199 Water Street. The company is looking to take floors 14 and 15 in the deal at 199 Water Street. The new offices will allow the firm to space its operations on fewer floors than at 60 Broad Street, which has smaller 12,000 square foot floors. Being spread across fewer levels is generally considered a more efficient layout for tenants.

Asking rents for the space at 199 Water Street, which is owned by Jack Resnick & Sons, are in the mid $40s per square foot.

Paul Ippolito, a leasing executive at Newmark Grubb Knight Frank, is representing Shutterstock in its search and negotiations for space.

Mr. Ippolito did not immediately return a call seeking comment. An email to Shutterstock’s online-only press apparatus was not immediately returned. Executives at Jack Resnick & Sons also couldn’t be reached.

]]>http://commercialobserver.com/2012/10/after-successful-ipo-shutterstock-plans-to-move-into-bigger-office-downtown/feed/0ShutterstockIDC Renews at 100 William Amid Leasing Lull Downtownhttp://commercialobserver.com/2012/10/241490/#commentshttp://commercialobserver.com/2012/10/241490/
Daniel Geigerhttp://commercialobserver.com/?p=241490Interactive Data Corporation has signed a 67,000-square-foot renewal deal at 100 William Street, the latest lease at the building during an otherwise sleepy period of activity in Lower Manhattan.

IDC will renew its lease for the building’s entire 15th, 16th and 17th floors. Asking rents at the property are in the $30s and $40s per square foot. The company, which is publicly listed, provides data services and trading support to financial firms.

100 William Street

Mark Ravesloot, a vice chairman at CBRE, oversees leasing at the property on behalf of its landlord, the Japanese real estate company Mitsui Fudosan. Mr. Ravesloot said recent renovations at the building attracted takers and, in the case of IDC, kept existing tenants in place.

“Keeping IDC is a testament to the fact that a lot has changed in the building,” Mr. Ravesloot said. “They wanted to see what we did in terms of the renovation work. I think that a deal like this shows they’re happy with how it was done.”

Mr. Ravesloot said Mitsui Fudosan has upgraded several areas of the 21-story, 415,000-square-foot property, including its lobby and elevator systems.

The deals would appear to be a credit to Mitsui Fudosan’s decision to invest in the property at a time when it was uncertain to pay off.

According to market data released earlier this week by CBRE, leasing activity in Lower Manhattan has fallen from last year. About 3.3 million square feet of leases have been signed so far in the neighborhood during the first three quarters of the year, a pace of transactions that is set to fall well below last year’s 5.9 million-square-foot total.

A big part of the slowdown can be attributed to a lack of larger leases. The biggest lease Downtown this year has been about 270,000 square feet, compared to last year’s over-one-million-square-foot deal with Conde Nast at One World Trade Center. Deals between 50,000 and 100,000 square feet, the size range of IDC’s transaction, have also slowed. According to CBRE, about 1.5 million square feet of space was leased through the third quarter last year by tenants in that size range, compared to about 1.1 million square feet this year.

Mr. Ravesloot and his agency team, which includes CBRE executives Scott Sloves and Jonathan Cope, have aggressively marketed 100 William Street, signing several new tenants in recent months.

Over the summer, the Motor Vehicle Accident Indemnification Corporation took 22,300 square feet at the building for rent in the high $30s per square foot.

The team also did deals with Tower Insurance for 14,000 square feet, the New York Property Insurance Underwriting Association for about 18,000 square feet and OdysseyRe, a reinsurance company, which took slightly over 40,000 square feet.

]]>Interactive Data Corporation has signed a 67,000-square-foot renewal deal at 100 William Street, the latest lease at the building during an otherwise sleepy period of activity in Lower Manhattan.

IDC will renew its lease for the building’s entire 15th, 16th and 17th floors. Asking rents at the property are in the $30s and $40s per square foot. The company, which is publicly listed, provides data services and trading support to financial firms.

100 William Street

Mark Ravesloot, a vice chairman at CBRE, oversees leasing at the property on behalf of its landlord, the Japanese real estate company Mitsui Fudosan. Mr. Ravesloot said recent renovations at the building attracted takers and, in the case of IDC, kept existing tenants in place.

“Keeping IDC is a testament to the fact that a lot has changed in the building,” Mr. Ravesloot said. “They wanted to see what we did in terms of the renovation work. I think that a deal like this shows they’re happy with how it was done.”

Mr. Ravesloot said Mitsui Fudosan has upgraded several areas of the 21-story, 415,000-square-foot property, including its lobby and elevator systems.

The deals would appear to be a credit to Mitsui Fudosan’s decision to invest in the property at a time when it was uncertain to pay off.

According to market data released earlier this week by CBRE, leasing activity in Lower Manhattan has fallen from last year. About 3.3 million square feet of leases have been signed so far in the neighborhood during the first three quarters of the year, a pace of transactions that is set to fall well below last year’s 5.9 million-square-foot total.

A big part of the slowdown can be attributed to a lack of larger leases. The biggest lease Downtown this year has been about 270,000 square feet, compared to last year’s over-one-million-square-foot deal with Conde Nast at One World Trade Center. Deals between 50,000 and 100,000 square feet, the size range of IDC’s transaction, have also slowed. According to CBRE, about 1.5 million square feet of space was leased through the third quarter last year by tenants in that size range, compared to about 1.1 million square feet this year.

Mr. Ravesloot and his agency team, which includes CBRE executives Scott Sloves and Jonathan Cope, have aggressively marketed 100 William Street, signing several new tenants in recent months.

Over the summer, the Motor Vehicle Accident Indemnification Corporation took 22,300 square feet at the building for rent in the high $30s per square foot.

The team also did deals with Tower Insurance for 14,000 square feet, the New York Property Insurance Underwriting Association for about 18,000 square feet and OdysseyRe, a reinsurance company, which took slightly over 40,000 square feet.

]]>http://commercialobserver.com/2012/10/241490/feed/1Taconic Close to $110 Million Deal for 619 West 54th Streethttp://commercialobserver.com/2012/10/taconic-close-to-110-million-deal-for-619-west-54th-street/#commentshttp://commercialobserver.com/2012/10/taconic-close-to-110-million-deal-for-619-west-54th-street/
Daniel Geigerhttp://commercialobserver.com/?p=241475Taconic Investment Partners is acquiring the office building 619 West 54th Street for around $110 million in a bet Manhattan’s fast changing West Side will continue north to an area that, until recently, has been largely overlooked as a desirable commercial neighborhood of the future.

“Go all the way up the West Side,” said Paul Pariser, who is a co-CEO of the firm along with Charles Bendit. “Tribeca is fabulous, Hudson Square is great, the Meatpacking District and Chelsea are booming, then there is the High Line and Hudson Yards and north of that there has been tons of residential development.”

619 West 54th Street

The neighborhood on the far West Side above 50th Street has been an overlooked enclave best known perhaps for the row of large car dealerships clustered along 11th Avenue. But like so many other areas on the West Side, it has been changing. The development firm Two Trees is nearing completion of Mercedes House, a large new rental apartment building that has been hailed for its striking architecture, on 53rd Street and 11th Avenue.

Taconic itself is involved in building a residential rental project nearby at 525 West 52nd Street.

Though the far West Side in the 50s is without convenient subway access, Mr. Bendit said the development of apartments in the area has created a population of residents that he and Mr. Pariser feel will come to prize the convenience of working in an nearby office building and will boost the neighborhood's prospects of becoming a more popular commercial district.

“We just believe in the area and the growth along the 11th Avenue corridor,” Mr. Bendit said. “It has a growing population of residents nearby and we feel that a building like 619 West 54th Street caters to that change.”

Taconic has made a name for itself by investing early in areas that vastly appreciate, particularly on the West Side. The company acquired 111 8th Avenue years ago and sold it early last year to Google for a whopping $2 billion. It also has made several investments in the Meatpacking District that proved to be highly successful.

The company will acquire 619 West 54th Street, which is roughly 326,000 square feet in size, from KBS Realty Advisors in a deal brokered by a sales team at Jones Lang LaSalle, led by Richard Baxter, a vice chairman at that firm.

“We think it’s a very fine physical building, it has a lot of the bones of a building like 111 8th Avenue, it’s built for industry, a big concrete structure with high ceilings and wonderful light,” Mr. Pariser said.

Mr. Pariser said Taconic will likely renovate the building but that the scope of that work had not yet been finalized.

]]>Taconic Investment Partners is acquiring the office building 619 West 54th Street for around $110 million in a bet Manhattan’s fast changing West Side will continue north to an area that, until recently, has been largely overlooked as a desirable commercial neighborhood of the future.

“Go all the way up the West Side,” said Paul Pariser, who is a co-CEO of the firm along with Charles Bendit. “Tribeca is fabulous, Hudson Square is great, the Meatpacking District and Chelsea are booming, then there is the High Line and Hudson Yards and north of that there has been tons of residential development.”

619 West 54th Street

The neighborhood on the far West Side above 50th Street has been an overlooked enclave best known perhaps for the row of large car dealerships clustered along 11th Avenue. But like so many other areas on the West Side, it has been changing. The development firm Two Trees is nearing completion of Mercedes House, a large new rental apartment building that has been hailed for its striking architecture, on 53rd Street and 11th Avenue.

Taconic itself is involved in building a residential rental project nearby at 525 West 52nd Street.

Though the far West Side in the 50s is without convenient subway access, Mr. Bendit said the development of apartments in the area has created a population of residents that he and Mr. Pariser feel will come to prize the convenience of working in an nearby office building and will boost the neighborhood's prospects of becoming a more popular commercial district.

“We just believe in the area and the growth along the 11th Avenue corridor,” Mr. Bendit said. “It has a growing population of residents nearby and we feel that a building like 619 West 54th Street caters to that change.”

Taconic has made a name for itself by investing early in areas that vastly appreciate, particularly on the West Side. The company acquired 111 8th Avenue years ago and sold it early last year to Google for a whopping $2 billion. It also has made several investments in the Meatpacking District that proved to be highly successful.

The company will acquire 619 West 54th Street, which is roughly 326,000 square feet in size, from KBS Realty Advisors in a deal brokered by a sales team at Jones Lang LaSalle, led by Richard Baxter, a vice chairman at that firm.

“We think it’s a very fine physical building, it has a lot of the bones of a building like 111 8th Avenue, it’s built for industry, a big concrete structure with high ceilings and wonderful light,” Mr. Pariser said.

Mr. Pariser said Taconic will likely renovate the building but that the scope of that work had not yet been finalized.

]]>http://commercialobserver.com/2012/10/taconic-close-to-110-million-deal-for-619-west-54th-street/feed/0LionTree Climbs Into 660 Madisonhttp://commercialobserver.com/2012/10/liontree-climbs-into-660-madison/#commentshttp://commercialobserver.com/2012/10/liontree-climbs-into-660-madison/
Daniel Geigerhttp://commercialobserver.com/?p=241393LionTree LLC has signed a deal for 10,400 square feet at 660 Madison Avenue.

The company, founded by the former UBS executive Aryeh Bourkoff, will take a portion of the building’s 10th floor, where asking rents are around $95 per square foot according to the online leasing database CoStar.

LionTree is one of several boutique financial firms that occupy space at 660 Madison Avenue, a building best known for the large Barney’s department store on its first nine floors.

After nearly falling into foreclosure during the downturn, the 500,000-square-foot (250,000 square feet of which are rentable by office tenants), 23-story office building was acquired by the Safra family, which controls a substantial banking empire based in Brazil. Since then, dealmaking has restarted at the building. Last year Falcon Edge, a hedge fund, took 9,000 square feet of space on the building’s 19th floor for big rents.

Barney’s, which owns its floors as a separate condo interest, leased space as well on the 10th floor earlier this year, in order to relocate offices from its existing space to create more room for selling merchandise.

Paul Amrich, a vice chairman at CBRE and one of the company’s top dealmakers, leads a leasing team that represents Safra at the property. Alex Chudnoff, a vice chairman at Jones Lang LaSalle who specializes in representing high-end tenants, led a JLL team that represented LionTree in the deal. Mr. Chudnoff also handled Falcon Edge’s deal a year ago.

]]>LionTree LLC has signed a deal for 10,400 square feet at 660 Madison Avenue.

The company, founded by the former UBS executive Aryeh Bourkoff, will take a portion of the building’s 10th floor, where asking rents are around $95 per square foot according to the online leasing database CoStar.

LionTree is one of several boutique financial firms that occupy space at 660 Madison Avenue, a building best known for the large Barney’s department store on its first nine floors.

After nearly falling into foreclosure during the downturn, the 500,000-square-foot (250,000 square feet of which are rentable by office tenants), 23-story office building was acquired by the Safra family, which controls a substantial banking empire based in Brazil. Since then, dealmaking has restarted at the building. Last year Falcon Edge, a hedge fund, took 9,000 square feet of space on the building’s 19th floor for big rents.

Barney’s, which owns its floors as a separate condo interest, leased space as well on the 10th floor earlier this year, in order to relocate offices from its existing space to create more room for selling merchandise.

Paul Amrich, a vice chairman at CBRE and one of the company’s top dealmakers, leads a leasing team that represents Safra at the property. Alex Chudnoff, a vice chairman at Jones Lang LaSalle who specializes in representing high-end tenants, led a JLL team that represented LionTree in the deal. Mr. Chudnoff also handled Falcon Edge’s deal a year ago.

]]>http://commercialobserver.com/2012/10/liontree-climbs-into-660-madison/feed/0Lion in a Tree.Computing Midtown South: Tech Is Booming, but for How Long?http://commercialobserver.com/2012/10/computing-midtown-south-tech-is-booming-but-are-their-financials-legit/#commentshttp://commercialobserver.com/2012/10/computing-midtown-south-tech-is-booming-but-are-their-financials-legit/
Daniel Geigerhttp://commercialobserver.com/?p=241266Late last year, when the education publishing company Scholastic offered up about 60,000 square feet of sublease space at the top of the Soho office building 568 Broadway, the firm quickly found it wouldn’t be difficult to fill.

Within weeks, a host of tenants were competing for it, including several tech firms, one of the most active sectors of the leasing market in Manhattan right now. Tumblr, foursquare and AppNexus, all well-known names in the industry, moved to the front of the pack.

On the face of it, such a decision would seem easy. Of the three, only AppNexus, a firm that specializes in online advertising and is backed by the software giant Microsoft, is known to be profitable. But in a tech boom in which riches don’t always flow from the most likely sources, the deal for the space took a different turn.

The competition soon boiled down not to AppNexus but to Tumblr and foursquare, two companies that have become top brands in the new internet boom and have raised tens of millions of dollars in venture capital between them, but have yet to find income-producing platforms for their services.

Midtown South.

Scholastic eventually cut a deal with foursquare for the space, despite some clear hesitation: convincing the sub-landlord that the company had the future business plan and talent to make good on its commitment was paramount in winning it the deal, according to its broker in the transaction, Sean Black, an executive at Jones Lang LaSalle.

“What do you do when you’re competing against someone just like you?” Mr. Black told The Commercial Observer during a recent conversation. “Well, I knew what the sub-landlord needed, more than anything: security. What are they going to do if they have a subtenant that goes under in a year or two, then they get the space back and there’s less term on the sublease and the office is worth a lot less? They want to know that the tenant they arrange will be there for the life of the lease.”

Still, Scholastic made what some leasing experts claim to be a risky choice, and in doing so highlighted the conundrum facing landlords all over the city—but particularly in Midtown South, the neighborhood that has emerged as the most popular among tech companies. Although these firms are the fastest-growing segment of the city’s economy and are often backed by big slugs of equity hoping to fund the next Facebook, many have thin financials, a short track record and, in the often sophisticated and fickle world of web commerce and social media, difficult-to-evaluate business plans.

“It’s very hard to tell what works,” Lawrence Lenihan, a venture capitalist with the firm FirstMark Capital, said. “Look at Groupon: everyone thought it was the greatest idea. Anyone in the minority who thought it wasn’t, in the end was right. It’s hard to get inside these companies and understand what will make a good investment.”

The siren song of high rents has landlords increasingly staking a bet on a sector many experts have begun to suggest is experiencing a bubble.

“I definitely think there’s going to be a big shakeout,” Mr. Lenihan, whose firm has invested in several well-regarded tech properties such as Pinterest, said. “Ninety percent of these firms are going to go by the wayside. That’s how it works.”

The boom, ushered in by firms like Google and LinkedIn and Facebook, which have all established sizeable beachheads in the city, has also created concerns whether areas like Midtown South are also unduly exposed to a possible repeat of the dot-com bust a little over a decade ago.

“It has to be a bubble,” one veteran Midtown South leasing broker at a major leasing brokerage told The Commercial Observer, requesting anonymity because of concerns his feelings on the market could alienate landlords who are his clients. “I’m starting to hear asking rents on space that used to be $35 or $40 per square foot at $75 asking rates. That’s like buildings on Park Avenue asking not $100 per square foot but $200 a foot. When did that happen last?”

Though several industries drive leasing in Midtown South, and the area increasingly appeals to established tenants like law firms and financial companies, technology businesses clearly have played a key role in lifting occupancy levels and rental rates in the area.

According to data compiled by the real estate services firm Cushman & Wakefield, about 3.1 million square feet was leased in Midtown South in the first nine months of the year, about the same level that was leased during the same period last year, when the tech boom began to gain steam. The figures are well higher than the historical average for the neighborhood in recent years, which typically sees about 2.7 million of leasing through the first three quarters of the year. A third of the activity in 2011 and 2012 has been driven by tech and new-media companies, C&W says. Rents have responded to the uptick in demand and are currently at nearly $50 per square foot on average in the area, $10 a foot higher than where they were a year ago and fast approaching the previous peak of about $55 per square foot in 2008.

“At this rate, we could hit all-time record rates for Midtown South by next year,” Ken McCarthy, an economist for Cushman & Wakefield, told The CO.

The strong market has emboldened landlords to position product to tap into the demand.
TF Cornerstone, a real estate development and investment firm, is renovating 387 Park Avenue South, an over-200,000-square-foot building it owns on 28th Street, to try to net rents in the $60s per square foot. Earlier this year, Imperium Capital, another real estate investment company, acquired 233 Spring Street and 161 Avenue of the Americas, a twin building complex the firm is planning to combine into a higher-end office building that will be about 740,000 square feet in size, making it one of the largest such towers in its area, on the border between Soho and Hudson Square. It too has lofty rental targets.

“We are looking to achieve rents in the $60s per square foot,” Daniel Glaser, a principal of the firm, told The CO, noting that current tenants in the property pay a fraction of that rate, as low as in the $20s per square foot.

For Mr. Glaser, a fundamental shift has occurred in Midtown South that he says prevents his project from being at the mercy of the technology sector.

“It’s now a neighborhood where you see all tenants wanting to have space,” Mr. Glaser said. “We don’t look at this as a risk. You have hedge funds coming to the area to take space. Everyone wants to be in neighborhoods like Soho.”

In fact, several leasing brokers, landlords and technology experts say that the downside risk to the current surge in Midtown South is far more contained than it was in the early 2000s, when dozens of technology firms that had doubled down on space in the preceding years went under and threw large chunks of space back onto the market.

“There are so many ways they could monetize the product,” Brian O’Kelley, the chief executive of AppNexus, which eventually took over 60,000 square feet of space at 28-40 West 23rd Street, said of Tumblr and foursquare. “These aren’t companies that are going to go under. If a firm like Gilt Groupe has lower sales than expected, it has a lot of equity behind it and it will go back and retrench and adjust and adapt. It’s not going to be like the dot-com bust, where all these companies just suddenly drop. Most of it nowadays is viable business models or companies that have a lot of promise.”

Landlords have also been more cautious.

After losing the space at 568 Broadway, Tumblr eventually resigned its lease at its existing location, 35 East 21st Street, and expanded to about 21,000 square feet in the roughly 100,000-square-foot building. The negotiations included direct talks between the building’s landlord, Centaur Properties, and Tumblr’s acclaimed founder David Karp, who, according to sources, gave a captivating presentation on the company’s potential and future.

Still, ownership took steps to protect itself, according to Daniel Levine, a leasing executive at Newmark Grubb Knight Frank, who along with Newmark’s New York-area president, David Falk, represented Centaur in the deal. Mr. Levine was not specific, but said the landlord received a significant security deposit. The expansion space that Tumblr will build out for its offices is also likely to have an installation that would appeal to other users.

“It’s the kind of space that, if we took out to the market, wouldn’t take long to fill,” Mr. Levine said.

]]>Late last year, when the education publishing company Scholastic offered up about 60,000 square feet of sublease space at the top of the Soho office building 568 Broadway, the firm quickly found it wouldn’t be difficult to fill.

Within weeks, a host of tenants were competing for it, including several tech firms, one of the most active sectors of the leasing market in Manhattan right now. Tumblr, foursquare and AppNexus, all well-known names in the industry, moved to the front of the pack.

On the face of it, such a decision would seem easy. Of the three, only AppNexus, a firm that specializes in online advertising and is backed by the software giant Microsoft, is known to be profitable. But in a tech boom in which riches don’t always flow from the most likely sources, the deal for the space took a different turn.

The competition soon boiled down not to AppNexus but to Tumblr and foursquare, two companies that have become top brands in the new internet boom and have raised tens of millions of dollars in venture capital between them, but have yet to find income-producing platforms for their services.

Midtown South.

Scholastic eventually cut a deal with foursquare for the space, despite some clear hesitation: convincing the sub-landlord that the company had the future business plan and talent to make good on its commitment was paramount in winning it the deal, according to its broker in the transaction, Sean Black, an executive at Jones Lang LaSalle.

“What do you do when you’re competing against someone just like you?” Mr. Black told The Commercial Observer during a recent conversation. “Well, I knew what the sub-landlord needed, more than anything: security. What are they going to do if they have a subtenant that goes under in a year or two, then they get the space back and there’s less term on the sublease and the office is worth a lot less? They want to know that the tenant they arrange will be there for the life of the lease.”

Still, Scholastic made what some leasing experts claim to be a risky choice, and in doing so highlighted the conundrum facing landlords all over the city—but particularly in Midtown South, the neighborhood that has emerged as the most popular among tech companies. Although these firms are the fastest-growing segment of the city’s economy and are often backed by big slugs of equity hoping to fund the next Facebook, many have thin financials, a short track record and, in the often sophisticated and fickle world of web commerce and social media, difficult-to-evaluate business plans.

“It’s very hard to tell what works,” Lawrence Lenihan, a venture capitalist with the firm FirstMark Capital, said. “Look at Groupon: everyone thought it was the greatest idea. Anyone in the minority who thought it wasn’t, in the end was right. It’s hard to get inside these companies and understand what will make a good investment.”

The siren song of high rents has landlords increasingly staking a bet on a sector many experts have begun to suggest is experiencing a bubble.

“I definitely think there’s going to be a big shakeout,” Mr. Lenihan, whose firm has invested in several well-regarded tech properties such as Pinterest, said. “Ninety percent of these firms are going to go by the wayside. That’s how it works.”

The boom, ushered in by firms like Google and LinkedIn and Facebook, which have all established sizeable beachheads in the city, has also created concerns whether areas like Midtown South are also unduly exposed to a possible repeat of the dot-com bust a little over a decade ago.

“It has to be a bubble,” one veteran Midtown South leasing broker at a major leasing brokerage told The Commercial Observer, requesting anonymity because of concerns his feelings on the market could alienate landlords who are his clients. “I’m starting to hear asking rents on space that used to be $35 or $40 per square foot at $75 asking rates. That’s like buildings on Park Avenue asking not $100 per square foot but $200 a foot. When did that happen last?”

Though several industries drive leasing in Midtown South, and the area increasingly appeals to established tenants like law firms and financial companies, technology businesses clearly have played a key role in lifting occupancy levels and rental rates in the area.

According to data compiled by the real estate services firm Cushman & Wakefield, about 3.1 million square feet was leased in Midtown South in the first nine months of the year, about the same level that was leased during the same period last year, when the tech boom began to gain steam. The figures are well higher than the historical average for the neighborhood in recent years, which typically sees about 2.7 million of leasing through the first three quarters of the year. A third of the activity in 2011 and 2012 has been driven by tech and new-media companies, C&W says. Rents have responded to the uptick in demand and are currently at nearly $50 per square foot on average in the area, $10 a foot higher than where they were a year ago and fast approaching the previous peak of about $55 per square foot in 2008.

“At this rate, we could hit all-time record rates for Midtown South by next year,” Ken McCarthy, an economist for Cushman & Wakefield, told The CO.

The strong market has emboldened landlords to position product to tap into the demand.
TF Cornerstone, a real estate development and investment firm, is renovating 387 Park Avenue South, an over-200,000-square-foot building it owns on 28th Street, to try to net rents in the $60s per square foot. Earlier this year, Imperium Capital, another real estate investment company, acquired 233 Spring Street and 161 Avenue of the Americas, a twin building complex the firm is planning to combine into a higher-end office building that will be about 740,000 square feet in size, making it one of the largest such towers in its area, on the border between Soho and Hudson Square. It too has lofty rental targets.

“We are looking to achieve rents in the $60s per square foot,” Daniel Glaser, a principal of the firm, told The CO, noting that current tenants in the property pay a fraction of that rate, as low as in the $20s per square foot.

For Mr. Glaser, a fundamental shift has occurred in Midtown South that he says prevents his project from being at the mercy of the technology sector.

“It’s now a neighborhood where you see all tenants wanting to have space,” Mr. Glaser said. “We don’t look at this as a risk. You have hedge funds coming to the area to take space. Everyone wants to be in neighborhoods like Soho.”

In fact, several leasing brokers, landlords and technology experts say that the downside risk to the current surge in Midtown South is far more contained than it was in the early 2000s, when dozens of technology firms that had doubled down on space in the preceding years went under and threw large chunks of space back onto the market.

“There are so many ways they could monetize the product,” Brian O’Kelley, the chief executive of AppNexus, which eventually took over 60,000 square feet of space at 28-40 West 23rd Street, said of Tumblr and foursquare. “These aren’t companies that are going to go under. If a firm like Gilt Groupe has lower sales than expected, it has a lot of equity behind it and it will go back and retrench and adjust and adapt. It’s not going to be like the dot-com bust, where all these companies just suddenly drop. Most of it nowadays is viable business models or companies that have a lot of promise.”

Landlords have also been more cautious.

After losing the space at 568 Broadway, Tumblr eventually resigned its lease at its existing location, 35 East 21st Street, and expanded to about 21,000 square feet in the roughly 100,000-square-foot building. The negotiations included direct talks between the building’s landlord, Centaur Properties, and Tumblr’s acclaimed founder David Karp, who, according to sources, gave a captivating presentation on the company’s potential and future.

Still, ownership took steps to protect itself, according to Daniel Levine, a leasing executive at Newmark Grubb Knight Frank, who along with Newmark’s New York-area president, David Falk, represented Centaur in the deal. Mr. Levine was not specific, but said the landlord received a significant security deposit. The expansion space that Tumblr will build out for its offices is also likely to have an installation that would appeal to other users.

“It’s the kind of space that, if we took out to the market, wouldn’t take long to fill,” Mr. Levine said.

]]>http://commercialobserver.com/2012/10/computing-midtown-south-tech-is-booming-but-are-their-financials-legit/feed/0View Of Lower ManhattanWhere Are the Big Tenants? CBRE Data Shows Lack of Large Deals in Manhattanhttp://commercialobserver.com/2012/10/cbre-data-shows-lack-of-big-deals-in-manhattan/#commentshttp://commercialobserver.com/2012/10/cbre-data-shows-lack-of-big-deals-in-manhattan/
Daniel Geigerhttp://commercialobserver.com/?p=241334The leasing market in Midtown and Lower Manhattan is down due to a paucity of big office deals, the real estate services company CBRE announced this morning, releasing its data for the third quarter of the year.

"In 2011 we had five deals over 250,000 square," Peter Turchin, a leasing executive at CBRE who delivered a presentation to the media at the company's headquarters, said, referring to Midtown. "In 2012 we haven’t had any. In 2011 we had 10 units leased above 100,000 square feet totaling 1.3 million square feet of deals. So far we’ve had two this year. So the real drop-off has been in the large tenant market."

Peter Turchin

Downtown also has tallied fewer big deals. Last year, Conde Nast signed an over one million square foot lease at One World Trade Center. So far this year, only one deal larger than 250,000 square feet has been done, a 273,000 square foot transaction far smaller than the blockbuster Conde lease. Three leases above 100,000 square feet were signed in Lower Manhattan compared to seven last year.

The lack of big transactions has had an impact.

According to CBRE’s leasing figures, 9.6 million square feet of space was leased in Midtown through the first three quarters of the year, a total that would appear to put the neighborhood on track for about 13 million square feet of deals - well below last year's total. Downtown has seen 3.3 million square feet of leasing this year compared to 4.8 million square feet during the same period last year.

In Midtown, 16.5 and 16.8 million square feet were taken respectively in 2010 and 2011, and the current year’s tally would equate to the most anemic period of leasing in the neighborhood since the depths of the recession in 2009 when there was about 11.6 million square feet of deals. Downtown’s projected leasing total would be higher than the last downturn but likely 25 percent less than last year’s roughly six million square feet of leases in that area.

In Midtown, where the dip in activity has been most pronounced, mid-sized deals, between 50,000 and 100,000 square feet, have also fallen from last year. Tenants of this size took about 1.5 million square feet during the first three quarters of 2011 in Midtown, more than the roughly 1.1 million square feet of activity they accounted for this year.

With the lack of sizable deals, the amount of big block spaces in Midtown has risen over the past year, from 30 options last October to 42 now.

Smaller deals, which have less of an impact on the health of the market, have tracked more consistently with last year’s numbers. About 2.2 million square feet of space was leased by tenants 25,000 to 50,000 square feet in size this year in Midtown compared with 2.6 million square feet last year. About three million square feet was leased both this year and last in Midtown by tenants 10,000 to 25,000 square feet in size. And 3.1 million square feet was leased by small tenants under 10,000 square feet in size so far this year in Midtown, compared to just slightly less during the same period last year.

“The decrease hasn’t been in the small tenant market,” Mr. Turchin said. “It’s just as active as it was a year ago. So if you’re an owner or you’re a tenant in the small-tenant market under 10,000 square feet, it’s been just as busy as it was in 2011.”

The sluggish activity has left rents and vacancy levels flat or weakening. Midtown vacancy was 12 percent, up from 11.3 percent at the start of the year. Average rental rates there are around $65 per square foot, only slightly above the $62 average at the beginning of the year. Downtown’s vacancy at the end of the third quarter was 10.6 percent, nearly identical to the 10.5 percent rate at the beginning of the year and average rents there have been hovering around $40 for the past three years.

Mr. Turchin indicated that landlords have been encouraged to break up big spaces in order to cater to the more active smaller-deal segment of the market. Such a strategy, he said, was employed at 399 Park Avenue, a building owned by Boston Properties where Mr. Turchin is a leasing agent. Earlier this year, about 150,000 square feet of space came available at the Midtown tower that Mr. Turchin helped fill with a collection of smaller tenants rather than one big user.

]]>The leasing market in Midtown and Lower Manhattan is down due to a paucity of big office deals, the real estate services company CBRE announced this morning, releasing its data for the third quarter of the year.

"In 2011 we had five deals over 250,000 square," Peter Turchin, a leasing executive at CBRE who delivered a presentation to the media at the company's headquarters, said, referring to Midtown. "In 2012 we haven’t had any. In 2011 we had 10 units leased above 100,000 square feet totaling 1.3 million square feet of deals. So far we’ve had two this year. So the real drop-off has been in the large tenant market."

Peter Turchin

Downtown also has tallied fewer big deals. Last year, Conde Nast signed an over one million square foot lease at One World Trade Center. So far this year, only one deal larger than 250,000 square feet has been done, a 273,000 square foot transaction far smaller than the blockbuster Conde lease. Three leases above 100,000 square feet were signed in Lower Manhattan compared to seven last year.

The lack of big transactions has had an impact.

According to CBRE’s leasing figures, 9.6 million square feet of space was leased in Midtown through the first three quarters of the year, a total that would appear to put the neighborhood on track for about 13 million square feet of deals - well below last year's total. Downtown has seen 3.3 million square feet of leasing this year compared to 4.8 million square feet during the same period last year.

In Midtown, 16.5 and 16.8 million square feet were taken respectively in 2010 and 2011, and the current year’s tally would equate to the most anemic period of leasing in the neighborhood since the depths of the recession in 2009 when there was about 11.6 million square feet of deals. Downtown’s projected leasing total would be higher than the last downturn but likely 25 percent less than last year’s roughly six million square feet of leases in that area.

In Midtown, where the dip in activity has been most pronounced, mid-sized deals, between 50,000 and 100,000 square feet, have also fallen from last year. Tenants of this size took about 1.5 million square feet during the first three quarters of 2011 in Midtown, more than the roughly 1.1 million square feet of activity they accounted for this year.

With the lack of sizable deals, the amount of big block spaces in Midtown has risen over the past year, from 30 options last October to 42 now.

Smaller deals, which have less of an impact on the health of the market, have tracked more consistently with last year’s numbers. About 2.2 million square feet of space was leased by tenants 25,000 to 50,000 square feet in size this year in Midtown compared with 2.6 million square feet last year. About three million square feet was leased both this year and last in Midtown by tenants 10,000 to 25,000 square feet in size. And 3.1 million square feet was leased by small tenants under 10,000 square feet in size so far this year in Midtown, compared to just slightly less during the same period last year.

“The decrease hasn’t been in the small tenant market,” Mr. Turchin said. “It’s just as active as it was a year ago. So if you’re an owner or you’re a tenant in the small-tenant market under 10,000 square feet, it’s been just as busy as it was in 2011.”

The sluggish activity has left rents and vacancy levels flat or weakening. Midtown vacancy was 12 percent, up from 11.3 percent at the start of the year. Average rental rates there are around $65 per square foot, only slightly above the $62 average at the beginning of the year. Downtown’s vacancy at the end of the third quarter was 10.6 percent, nearly identical to the 10.5 percent rate at the beginning of the year and average rents there have been hovering around $40 for the past three years.

Mr. Turchin indicated that landlords have been encouraged to break up big spaces in order to cater to the more active smaller-deal segment of the market. Such a strategy, he said, was employed at 399 Park Avenue, a building owned by Boston Properties where Mr. Turchin is a leasing agent. Earlier this year, about 150,000 square feet of space came available at the Midtown tower that Mr. Turchin helped fill with a collection of smaller tenants rather than one big user.

]]>http://commercialobserver.com/2012/10/cbre-data-shows-lack-of-big-deals-in-manhattan/feed/0Microsoft the Latest Big Tech Company to Come to Midtown Southhttp://commercialobserver.com/2012/10/microsoft-the-latest-big-tech-company-to-come-to-midtown-south/#commentshttp://commercialobserver.com/2012/10/microsoft-the-latest-big-tech-company-to-come-to-midtown-south/
Daniel Geigerhttp://commercialobserver.com/?p=241287After making plans toswap locations in Midtown, Microsoft is now in talks to take another space in Midtown South, an area of the city that has become a magnet for software and technology companies.

The company, which is close to releasing the latest version of its operating system Windows 8 and a new tablet computer that will compete with the iPad, is nearing a roughly 22,000-square-foot deal for the entire seventh floor of 641 Avenue of the Americas.

641 Avenue of the Americas.

The company will take over space that had previously been occupied by the social media software firm Meebo, which leased the space last year but was acquired over the summer by the Internet search and software giant Google and subsequently relocated into Google's offices on Eighth Avenue in Chelsea.

It was not immediately clear what Microsoft plans to house in the new location. The company currently has its New York headquarters in 250,000 square feet at 1290 Avenue of the Americas. According to several sources, Microsoft is in the midst of negotiating an over 400,000-square-foot lease to move that space to 11 Times Square, a recently constructed office tower on the corner of 42nd Street and Eighth Avenue.

The move into a brand new skyscraper and now the city's hottest tech center give the impression of a company making bold real estate decisions to help overhaul its staid culture and image.

The tech sector has clearly ordained Midtown South and its decidedly non-corporate aesthetic its neighborhood of choice, with big names like Google, Tumblr and Yelp taking space there in recent years. The area’s popularity has prompted even larger tech companies that have graduated into the buttoned-down environs of Midtown to shop the neighborhood for ancillary offices. Facebook for instance leased a large space at the Midtown building 335 Madison Avenue but has been rumored to be perusing Midtown South for another location.

The real estate investment trust SL Green just acquired 641 Avenue of the Americas and a neighboring office property 635 Avenue of the Americas for $173 million according to written reports. Sources say the new landlord cancelled Meebo’s deal in order to arrange a transaction directly with Microsoft.

Sources at SL Green couldn’t be immediately reached for comment. A leasing team from CBRE led by Ken Rapp, a leasing executive at the company, had marketed the Meebo space on behalf of Google before the deal with Microsoft was arranged. Mr. Rapp also could not be reached. A spokeswoman for Microsoft did not immediately respond to a request for comment. Lisa Kiell, a leasing broker at Jones Lang LaSalle who represents Microsoft, did not return a call seeking comment.

]]>After making plans toswap locations in Midtown, Microsoft is now in talks to take another space in Midtown South, an area of the city that has become a magnet for software and technology companies.

The company, which is close to releasing the latest version of its operating system Windows 8 and a new tablet computer that will compete with the iPad, is nearing a roughly 22,000-square-foot deal for the entire seventh floor of 641 Avenue of the Americas.

641 Avenue of the Americas.

The company will take over space that had previously been occupied by the social media software firm Meebo, which leased the space last year but was acquired over the summer by the Internet search and software giant Google and subsequently relocated into Google's offices on Eighth Avenue in Chelsea.

It was not immediately clear what Microsoft plans to house in the new location. The company currently has its New York headquarters in 250,000 square feet at 1290 Avenue of the Americas. According to several sources, Microsoft is in the midst of negotiating an over 400,000-square-foot lease to move that space to 11 Times Square, a recently constructed office tower on the corner of 42nd Street and Eighth Avenue.

The move into a brand new skyscraper and now the city's hottest tech center give the impression of a company making bold real estate decisions to help overhaul its staid culture and image.

The tech sector has clearly ordained Midtown South and its decidedly non-corporate aesthetic its neighborhood of choice, with big names like Google, Tumblr and Yelp taking space there in recent years. The area’s popularity has prompted even larger tech companies that have graduated into the buttoned-down environs of Midtown to shop the neighborhood for ancillary offices. Facebook for instance leased a large space at the Midtown building 335 Madison Avenue but has been rumored to be perusing Midtown South for another location.

The real estate investment trust SL Green just acquired 641 Avenue of the Americas and a neighboring office property 635 Avenue of the Americas for $173 million according to written reports. Sources say the new landlord cancelled Meebo’s deal in order to arrange a transaction directly with Microsoft.

Sources at SL Green couldn’t be immediately reached for comment. A leasing team from CBRE led by Ken Rapp, a leasing executive at the company, had marketed the Meebo space on behalf of Google before the deal with Microsoft was arranged. Mr. Rapp also could not be reached. A spokeswoman for Microsoft did not immediately respond to a request for comment. Lisa Kiell, a leasing broker at Jones Lang LaSalle who represents Microsoft, did not return a call seeking comment.

]]>http://commercialobserver.com/2012/10/microsoft-the-latest-big-tech-company-to-come-to-midtown-south/feed/1641 Avenue of the AmericasNoMad Meets RugLand Where Madison Square and Union Square Collidehttp://commercialobserver.com/2012/10/nomad-meets-rugland-in-midtown-south/#commentshttp://commercialobserver.com/2012/10/nomad-meets-rugland-in-midtown-south/
Daniel Geigerhttp://commercialobserver.com/?p=241215The area north of Madison Square Park has long been without an agreed-upon name and without a go-to tenant base.

Lately it’s being dubbed NoMad, and with this newfound recognition, it has become a draw for office tenants, especially those confounded by the boom in Midtown South, the greater neighborhood of which it is a part.

Madison Square/Union Square.

“There are a lot of tech companies and other tenants who are being pushed out of [prime] Midtown South [submarkets] right now because of the low vacancy rate and the high rents,” said Andy Roos, a leasing executive with Colliers International who owns and leases properties in the emerging area. “Now they’re starting to head north to NoMad.”

Mr. Roos said that tenants in the rug business and lingerie makers used to cluster in the area. High-end carpet sellers still occupy retail space along corridors such as lower Madison Avenue, but much of the office tenancy in the area is turning over to more lucrative takers.

Mr. Roos owns a building in the heart of the neighborhood, 136 Madison Avenue, which has been a benefactor of the activity. He, and Cushman & Wakefield executives Andrew Peretz and William Levitsky, recently arranged a 10-year, 18,400-square-foot deal with the public relations firm Sunshine Sachs & Associates for the building’s top floor.

According to Mr. Roos, two tenants are currently vying for the 20,000-square-foot second floor.

Mr. Roos owns another property in the vicinity, 38 East 32nd Street, which he said he could also find takers for if it had vacancy.

The buildings have benefited from the tight office neighborhoods to the south, such as Fifth Avenue below 23rd Street, Park Avenue South and the area surrounding Union Square.

Paul Amrich, a leasing executive with CBRE, said that tenants who are interested in Midtown South but have found space hard to come by are shopping for locations even further away than the rug district. Mr. Amrich is the leasing agent for two buildings, 1370 Broadway and 104 West 40th Street, which have both attracted a collection of tenants in recent months.

“A lot of media and tech companies are moving north from Midtown South and crossing the bowtie north of Herald Square,” Mr. Amrich said. “1370 Broadway is on 36th street, so it isn’t far.”

Earlier this year, Vox Media signed a nearly 17,000-square-foot lease for a space at 104 West 40th Street, which the building’s owners had purposely stripped down upon Mr. Amrich’s recommendation to create the chic, loft-like aesthetic of a Midtown South building.

“The space had exposed ceilings and polished concrete floors,” Mr. Amrich said. “Vox initially was looking only [at] Midtown South, but when they saw the space we had, they realized it was exactly what they were looking for.”

A few weeks later, fashion tenant Collection 18 has signed a lease for the top two floors at 1370 Broadway, 16 and 17, which total about 32,000 square feet.

Asking rents for that space were in the $50s per square foot.

“Tech, media and creative tenants are all very active right now,” Mr. Amrich said.

]]>The area north of Madison Square Park has long been without an agreed-upon name and without a go-to tenant base.

Lately it’s being dubbed NoMad, and with this newfound recognition, it has become a draw for office tenants, especially those confounded by the boom in Midtown South, the greater neighborhood of which it is a part.

Madison Square/Union Square.

“There are a lot of tech companies and other tenants who are being pushed out of [prime] Midtown South [submarkets] right now because of the low vacancy rate and the high rents,” said Andy Roos, a leasing executive with Colliers International who owns and leases properties in the emerging area. “Now they’re starting to head north to NoMad.”

Mr. Roos said that tenants in the rug business and lingerie makers used to cluster in the area. High-end carpet sellers still occupy retail space along corridors such as lower Madison Avenue, but much of the office tenancy in the area is turning over to more lucrative takers.

Mr. Roos owns a building in the heart of the neighborhood, 136 Madison Avenue, which has been a benefactor of the activity. He, and Cushman & Wakefield executives Andrew Peretz and William Levitsky, recently arranged a 10-year, 18,400-square-foot deal with the public relations firm Sunshine Sachs & Associates for the building’s top floor.

According to Mr. Roos, two tenants are currently vying for the 20,000-square-foot second floor.

Mr. Roos owns another property in the vicinity, 38 East 32nd Street, which he said he could also find takers for if it had vacancy.

The buildings have benefited from the tight office neighborhoods to the south, such as Fifth Avenue below 23rd Street, Park Avenue South and the area surrounding Union Square.

Paul Amrich, a leasing executive with CBRE, said that tenants who are interested in Midtown South but have found space hard to come by are shopping for locations even further away than the rug district. Mr. Amrich is the leasing agent for two buildings, 1370 Broadway and 104 West 40th Street, which have both attracted a collection of tenants in recent months.

“A lot of media and tech companies are moving north from Midtown South and crossing the bowtie north of Herald Square,” Mr. Amrich said. “1370 Broadway is on 36th street, so it isn’t far.”

Earlier this year, Vox Media signed a nearly 17,000-square-foot lease for a space at 104 West 40th Street, which the building’s owners had purposely stripped down upon Mr. Amrich’s recommendation to create the chic, loft-like aesthetic of a Midtown South building.

“The space had exposed ceilings and polished concrete floors,” Mr. Amrich said. “Vox initially was looking only [at] Midtown South, but when they saw the space we had, they realized it was exactly what they were looking for.”

A few weeks later, fashion tenant Collection 18 has signed a lease for the top two floors at 1370 Broadway, 16 and 17, which total about 32,000 square feet.

Asking rents for that space were in the $50s per square foot.

“Tech, media and creative tenants are all very active right now,” Mr. Amrich said.

]]>http://commercialobserver.com/2012/10/nomad-meets-rugland-in-midtown-south/feed/0CO MID-TOWN SOUTH 24, 26, 28Two Trees Closes on Domino Factory in $185 Million Dealhttp://commercialobserver.com/2012/10/two-trees-closes-on-domino-factory-in-185-million-deal/#commentshttp://commercialobserver.com/2012/10/two-trees-closes-on-domino-factory-in-185-million-deal/
Daniel Geigerhttp://commercialobserver.com/?p=241191Two Trees has completed a $185 million acquisition of the Domino Sugar Factory, an 11-acre parcel on the Brooklyn Waterfront where the development firm plans to build potentially billions of dollars worth of residential apartments.

The site had been at the center of a months-long legal dispute between its two previous owners, CPC Resources and the Katan Group, in which Katan had tried to block the sale to Two Trees on claims it had received higher offers from other buyers, including the investor Joe Chetrit.

Katan Group CEO Isaac Katan in front of the Domino Factory

Katan and CPCR bought the site in 2006 for $55 million with plans to build a group of high-rise residential towers that would feature a significant component of affordable housing. But by last year, the partnership was in default on over $125 million it had borrowed in connection with the project and Katan filed suit against CPCR alleging the company had accomplished little in accruing the massive debt and had mismanaged the project.

After arranging to hand the Domino site to its lender Pacific Coast Capital Partners in a deal that would have valued the site at around $140 million, CPCR reached an agreement with Two Trees in June to sell it for $160 million. Eventually Two Trees raised its offer to $185 million after Katan claimed it had better bids from other interested buyers that reached in excess of $200 million.

Katan attempted to block the sale to Two Trees, winning a temporary injunction against the sale in late September. That decision, Katan’s final legal option in opposing the deal, was overthrown last week by a state Appellate Court, paving the way for Two Trees to close on the site, which features the derelict remnants of what was once one of the world's largest sugar refineries.

“The sale of Domino heralds a stronger, more viable CPC, strengthening our ability to focus on our core mission of providing much needed capital for affordable housing across New York City and State,” Rafael Cestero, the president and CEO of the Community Preservation Corporation said in a statement released by the organization. “Two Trees has a track record in developing and revitalizing communities, and this deal is an excellent opportunity for Domino to become the vibrant, mixed-income waterfront community we envision it to be.”

Katan’s lawyers have hinted that the company may opt to sue CPCR for the lost proceeds it would have been able to net from selling to one of the buyers it claims would have extended substantially more for the factory site.

]]>Two Trees has completed a $185 million acquisition of the Domino Sugar Factory, an 11-acre parcel on the Brooklyn Waterfront where the development firm plans to build potentially billions of dollars worth of residential apartments.

The site had been at the center of a months-long legal dispute between its two previous owners, CPC Resources and the Katan Group, in which Katan had tried to block the sale to Two Trees on claims it had received higher offers from other buyers, including the investor Joe Chetrit.

Katan Group CEO Isaac Katan in front of the Domino Factory

Katan and CPCR bought the site in 2006 for $55 million with plans to build a group of high-rise residential towers that would feature a significant component of affordable housing. But by last year, the partnership was in default on over $125 million it had borrowed in connection with the project and Katan filed suit against CPCR alleging the company had accomplished little in accruing the massive debt and had mismanaged the project.

After arranging to hand the Domino site to its lender Pacific Coast Capital Partners in a deal that would have valued the site at around $140 million, CPCR reached an agreement with Two Trees in June to sell it for $160 million. Eventually Two Trees raised its offer to $185 million after Katan claimed it had better bids from other interested buyers that reached in excess of $200 million.

Katan attempted to block the sale to Two Trees, winning a temporary injunction against the sale in late September. That decision, Katan’s final legal option in opposing the deal, was overthrown last week by a state Appellate Court, paving the way for Two Trees to close on the site, which features the derelict remnants of what was once one of the world's largest sugar refineries.

“The sale of Domino heralds a stronger, more viable CPC, strengthening our ability to focus on our core mission of providing much needed capital for affordable housing across New York City and State,” Rafael Cestero, the president and CEO of the Community Preservation Corporation said in a statement released by the organization. “Two Trees has a track record in developing and revitalizing communities, and this deal is an excellent opportunity for Domino to become the vibrant, mixed-income waterfront community we envision it to be.”

Katan’s lawyers have hinted that the company may opt to sue CPCR for the lost proceeds it would have been able to net from selling to one of the buyers it claims would have extended substantially more for the factory site.